Help! I Can’t Pay My Tax Debt
Realizing that you have a mounting tax debt that you are unable to pay is extremely stressful and worrisome. The IRS does not generally forget about tax debt so coming up with a plan for paying it is critical. But how? You do not have enough money in the bank. How will you ever be able to pay for it?
Fortunately, there are some realistic options that you might not have yet considered to handle your tax debt once and for all. Just remember that you should never delay submitting your tax return, no matter how much you owe. This will just add interest and penalties to your debt. Here are some things to consider as you formulate your plan to pay down your tax debt:
Look Creatively at Your Own Finances
Before you look for IRS programs to help you pay down your tax debt, look creatively at your own financial situation. For example, using a credit card to pay for your debt may be an option that saves you money and headaches over time. You can also be in contact with your bank/mortgage company to investigate the idea of a home equity loan. Of course, these options are not ideal, but often times the interest rate for these options are lower than what you will end up paying to the IRS.
Short Term Extension
Be aware that filing a traditional extension does not extend the amount of time you have to pay, it only extends the amount of time you have to file. You can, however, make a short term payment extension which can give you up to 120 days extra to pay your tax bill, if you think you will be able to come up with the funds in that time. You have to make this request to the IRS online.
You can also apply for an installment agreement, which would allow you to pay your debt in monthly installments over time, rather than in one large lump sum. This is a great option for many taxpayers. To apply, you can complete Form 9465 or apply on the IRS website.
Offer in Compromise
If you cannot afford to pay the amount that you owe, and paying this would cause significant financial hardship, you can apply for an offer in compromise. This program allows you to pay a portion of the tax debt you owe. You will have to show cause for this and prove to the IRS that it is unlikely that you will be able to pay the full amount. These are not granted often or easily, so you should take special care to provide adequate and detailed information.
If you are overwhelmed by the prospect of a large amount of tax debt and are not sure the best course of action for you, consider getting some help. A tax firm can help review the options and help determine the best plan for you.
Success Tax Relief is a tax firm with over 30 years of experience working with taxpayers to minimize their debt and help negotiate with the IRS. The first thing that we will do is review your return to see if there are areas where you could add additional deductions to reduce the overall amount you owe. We can also help you apply for installment agreement and offer in compromise programs. Find a solution to your tax debt by contacting Success Tax Relief today!