Death and taxes may be unavoidable, but dealing with the stress of tax debt doesn’t have to be.
It can be stressful. To say the least, when you owe the IRS money that you are struggling to pay, but there are steps you can take to get out of your situation and make things right with the IRS again. Let’s take a look at some of them.
1. Face the problem
It’s tempting to try and ignore the problem of your tax debt, but that won’t work because the IRS sure will not let it go. If you can’t pay, you should still file your tax return as usual, or at the very least file for an extension. Filing late will just add 5 percent to your bill each month until you reach a 25 percent penalty. Not only that, but if you underpay, you’ll be charged between 0,5 and 1 percent interest on the balance each month, so any efforts you make will help to keep your tax bill lower, even if you can’t clear it immediately.
2. Consider tax forgiveness
Although it is very rare for the IRS to forgive tax debts, it may be worth talking to tax professionals, like those at https://creativetax.io/, about your likelihood of being forgiven. If you are in truly dire straits financially and don’t have any assets to speak of, there is a chance that filing Form 656 could work out for you, and you could be allowed to settle your tax liability for a smaller amount than you actually owe. So, it may well be worth exploring with a tax professional to fight your corner with the IRS.
3. File a payment plan
If you aren’t able to clear your tax debt in full right now, and you owe around $10000 or less, you could file Form 9465, and apply to have a payment plan put in place. This will help you to pay off your tax and any interest accrued over a period of three years, and you’ll be automatically accepted if you’re under the $10000 threshold, so at the very least, it should give you some breathing space and a plan of action going forward.
4. Hire a tax attorney
If you owe more than $10000 in back taxes, hiring a reputable tax attorney could be a good idea. They will negotiate on your behalf to ensure that you get the best possible repayment terms from the IRS. They may also be able to help you avoid a credit-damaging tax lien too, which should make your life a bit easier right now.
5. Think about the Fresh Start program
The IRS’ Fresh Start program is ideal for people with sizeable tax debts of up to $100,000. It offers a range of options for debt relief, allowing you to streamline your taxes and get out of debt more quickly. It’s a great program, which f you are eligible, should give you some peace of mind.
Tax debt can be scary, but there are always things you can do to get back on track.
Ft. img: Pexels – CCO Licence