A few weeks out from tax day and the big question might be: should I pay what I owe for 2018 before April 15th? Or should I keep paying these back taxes?
The right answer is to stay current on 2019 taxes above all. That means paying your current taxes on your current income is the most important thing. (If you have that handled, then pay off 2018. And then if you have that handled, we'll you're good to go. Stay in your payment plan and ask for a penalty waiver on the back taxes!)
Why stay current on 2019 above all?
1. Whenever you owe new taxes you are resetting the statute of limitations on your back taxes owed another year. This screws up the Math in an Offer in Compromise, for example. Offers look at your ability to pay back your debt before the debts expire and owing again means a new 10 year clock rather than a 9 or 8 or 7 (6,5,4,3,2,1) year clock.
2. Furthermore, paying your current taxes eventually will put you in a position where you can ask for a penalty waiver on your back taxes. Owing again and again means the IRS won't look kindly on a penalty waiver.
3. But what if you are in an installment agreement on the back taxes? Yes we know, but your current 2019 taxes should be your priority even if that means defaulting an agreement (which you can renegotiate later with a few month grace period).
