Tips For Getting Out From Under Heavy Tax Debt Burdens
If tax debt has you down, you do have options to either consolidate your debts or negotiate them with the United States government. In the end, the government can’t make you pay more than you are able to reasonably pay.
First you must look into hiring a personal accountant or tax assistant. Both professionals will have the expertise necessary to see what you can do, specifically, to get out of debt with the IRS. Accountants tend to be based on flat fees, while tax assistants might not charge you if they can’t aid your plight, which is always nice!
Sometimes when you are self employed, you can easily lose track of your income and you might want to just file an extension on your taxes. This is because you know you will have the money to pay for the tax debts later, but due to some errors in your income tracking, you couldn’t do it quarterly or annually. For tough tax debt problems, simply filing an extension won’t help you in the long run.
There are times in which you know you are way in over your head. At these times, your only option might be to schedule a payment plan throughout the year to pay. A payment plan will please the IRS, as they are still getting their due, albeit a bit late. Payment plans are less applicable for cases in which you owe a lot of money, since you will continually be putting more debt onto the amount by the time the next tax season comes.
The IRS does allow bargaining for cases where you know you can pay a lesser amount. This is called an Offer in Compromise. An Offer in Compromise is only reserved for those who genuinely may not make their payments. The IRS will only agree to a lesser amount paid if they think that the funds required to try and collect the amount outweigh your actually ability to pay the amount in a reasonable time.
A penalty fee is applied to all accounts that are late in payment. If you already know you will be late with your payment, a solution would be to file for a penalty abatement. A tax officer will be able to help you with this. It’s not an overly complex process, but will take some work in filling out forms and contacting the IRS. In the end you can not only save on penalties, but also negotiate a fair debt price.
Final thoughts
Problems with tax debts don’t have to dictate your lifestyle. You should already be making phone calls to the IRS and to tax brokers to see what your options are in decreasing the debt, making payments, or deciding on what you can do to better your debt situation.
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I’m suffering from paying heavy tax monthly, but I’m not sure if these tips work for me. Thanks for sharing anyway.