Key Takeaways
- Resolving old tax issues depends on how you handle your 2025 taxes
- Filing your 2025 return on time matters even if you can’t pay the full balance
- For self-employed taxpayers, estimated payments are part of staying current on 2025 taxes
- Penalties for unfiled returns grow faster than penalties for unpaid taxes
When you’re dealing with back taxes or unfiled returns, it’s easy to overlook the importance of keeping this year’s taxes current. I’ve seen plenty of people avoid about all tax things when the demands keep piling up.
But not addressing your 2025 taxes is something the IRS will pay attention to when you do approach them about resolving old tax issues.
Both your past and present actions influence their decisions around installment agreements, penalty relief, and whether resolution efforts can move forward without interruption.
Let’s look into this a little more closely.
File 2025 taxes even if you can’t pay
One of the most common misunderstandings I see is the idea that filing only matters if you can pay what you owe.
In practice, filing your 2025 taxes matters regardless.
You can be working toward resolving past balances and still get knocked off track by a late 2025 return or missed estimated payment. At that point, you’re no longer just dealing with prior years. You’re creating new issues the IRS has to account for.
The IRS generally decides not to approve (or maintain) an installment agreement if current returns aren’t being filed and required payments aren’t being addressed. Staying current is one of the clearest signals to them that you’re holding up your end of the process.
Why filing late can cost more than paying late
When a return isn’t filed, the IRS can assess a failure-to-file penalty equal to 5% of the unpaid tax per month, capped at 25%. That cap is reached quickly.
For example, let’s say you owe $40,000 for 2025 taxes. The failure-to-file penalty would accumulate up to $10,000 in five months time.
If your return is filed on time but the balance isn’t paid, the failure-to-pay penalty is much smaller. It’s generally 0.5% per month, which works out to about $200 per month on a $40,000 balance. It takes years for those penalties to reach the same level.
Of course, interest does apply in both cases, but the penalty difference alone can significantly affect how manageable your tax situation becomes.
Estimated payments count too
If you’re self-employed or own your own business, staying current with 2025 taxes also means making your estimated tax payments by the subsequent deadlines (in 2026 those are: April 15, June 15, September 15, and January 15, 2027).
You can file your 2025 return on time and still be viewed as non-compliant if required estimated payments aren’t being made. This is a common blind spot, especially when attention is focused on older IRS issues or cash flow is tight.
This is why sequencing matters. Filing, estimated payments, and resolution efforts need to work together. Treating them as separate problems usually leads to delays and additional penalties.
Final thoughts
Any attempt to resolve IRS issues should start with clarity around your 2025 taxes.
Once this year’s filing requirements and payment expectations are accounted for, including estimated payments where required, you’ll be in a much stronger position to deal with your older tax issues.
This doesn’t mean everything gets fixed at once. But you will stop making decisions that unintentionally make the problem more expensive.
Frequently Asked Questions
“Should I file my 2025 taxes if I can’t pay what I owe?”
Yes. Filing on time usually results in much lower penalties than not filing at all. Even if you can’t pay, filing your 2025 taxes protects your ability to explore payment options and resolve older tax issues.
“Do I have to make estimated tax payments if I already owe the IRS?”
In many cases, yes. For self-employed taxpayers and business owners, estimated payments are part of staying current on 2025 taxes. Filing alone may not satisfy the IRS’s definition of compliance if estimated payments are required and not being made.
“Can I get an installment agreement if I’m behind on my current taxes?”
It depends. The IRS looks closely at whether current returns are filed and required payments are being addressed when approving or maintaining installment agreements. Falling behind on current obligations can delay or jeopardize that process.
“Will filing my 2025 taxes make my old tax debt go away?”
No. Filing doesn’t eliminate old tax debt, but it helps prevent new penalties and keeps resolution options available. Staying current is often a prerequisite for successfully addressing past issues.
“What happens if I file my 2025 taxes but don’t make estimated payments?”
For many self-employed taxpayers, filing alone does not mean you’re considered current. If estimated payments are required and not being made, the IRS may still view you as non-compliant. That can affect your ability to start or maintain an installment agreement and may lead to additional penalties.