3 Options for Reducing Tax Debt
If you are one of the large number of taxpayers who owe the IRS back taxes, you are probably wondering how you will ever get this monkey off of your back. After all, you still have living expenses and your current tax return to complete.
The best advice you will likely hear is to find a way to take control of the situation and find a way to reduce your debt. The IRS offers several options that might help you do this.
1. Installment Agreement
Many people who owe back taxes to the IRS investigate and pursue an installment agreement, which allows them to pay their tax debt back over time rather than in one lump sum.
Paying the full amount all at once is simply not feasible for everyone, so the installment agreement can be very appealing.
Your payments are paid monthly to the IRS and you actually have some input into how much those payments are.
For those who owe less than $50,000, you are almost guaranteed an installment agreement for 72 months.
Keep in mind, however, that in addition to your tax debt, you must also pay back any penalties and interest that accrue.
This can prove difficult and can translate to owing the IRS much more than your original debt, so the sooner you file for an installment agreement and start paying, the better.
2. Offer in Compromise
This strategy for reducing tax debt allows you to settle your tax debt with the IRS for less than you owe.
These agreements are fairly difficult to get, but can be worth a try if you simply cannot afford to pay back the tax debt that is owed.
To qualify, you must be up to date with your returns and must not be in bankruptcy. You will also need to be prepared to share details about your financial situation so that you can prove that you truly do not have the means to pay back your debt. Find out more about offers in compromise.
3. Amending Your Past Returns
Another way that you can conceivably reduce your tax debt is to have your tax returns reviewed carefully to see if your tax liability has been overstated for some reason.
For example, if you did not file a tax return and the IRS filed a substitute form on your behalf, you may have missed out on many deductions or credits that you qualify for.
Tax Help When You Need It
An experienced tax firm can review your entire tax situation including past returns and determine the best course of action for your individual situation.
Success Tax Relief has more than 30 years of experience partnering with taxpayers just like you to review taxes and reduce your overall tax debt.
We understand how stressful difficult tax situations can be. Contact us today and let help reduce the stress and find a solution that will work for you.