Paying Off Your Tax Debt By Planning Ahead
No one wants to face the idea that they owe the IRS money. Tax debt is a reality for millions of taxpayers in our country. The way that we deal with it helps determine our financial success in general. If you know that you will most likely owe the IRS money around tax time, then here are some tasks to execute in order to make paying your debt off feasible.
1. File your return on time: Resist the temptation to bury your head in the sand. File your return on time to avoid late fees, penalties, and additional interest. Filing your return late, even if you do not have the money to pay will only increase your tax problem.
2. Short-Term Extension: If you think that you can pay what you owe on the condition of receiving a short-term extension (120 days), then make this request to the IRS. Most often this payment plan does not have a fee and if your previous returns are current, the IRS is likely to agree to this.
3. Personal Payment Options: Think ahead about options for paying the debt. Many taxpayers opt to investigate the idea of putting their tax debt on a credit card (you may find interest rates on credit cards are less). A loan from a family member or close friend is also another option for taking care of the debt to the IRS without suffering more penalties.
4. IRS Payment Plans: If you determine that putting the debt on a credit card and/or borrowing the money is not an option for you, then you may want to investigate payment options from the IRS. These include:
- Installment Agreements: The IRS will sometimes agree to let taxpayers pay their debt over time, rather than in one lump sum. There is a process for applying for an installment plan and you will have to be able to make substantive monthly payments for up to 6 years.
- Offer in Compromise: If you are truly unable to afford the tax debt that you have accrued, then you may be able to propose to the IRS a payment them less than the amount owed. As you might expect, these programs are difficult to get approved and you must be able to produce significant personal documentation to verify that you cannot afford the debt.
5. Get Help: If you decide to explore IRS payment plans (an installment agreement or an offer in compromise) or if you choose to file for a short term extension, it is highly recommended to seek the help of a tax professional to be sure that your forms are completed accurately and you will have the best possible chance of getting IRS approval for your desired plan.
Success Tax Relief has been working with taxpayers for more than 30 years and specializes in communicating directly with the IRS on our client’s behalf. We can review your tax returns to confirm what you owe and assist completing the necessary paperwork. Get the process started by contacting us online or calling 1-877-825-1179. We can help you develop an affordable plan for repayment that will work for you.