The First Steps You Need to Take to Settle Your Back Taxes
If you owe back taxes to the Internal Revenue Service (IRS), chances are you have already spent a lot of time worrying about how to resolve this debt without significantly impacting your day to day life. Tax debt is a large financial and emotional burden and can be difficult to navigate on your own. Here are some tips on how you can settle your tax debt with the IRS once and for all.
Key Steps to Settle Your Outstanding Tax Debt
- Confirm the exact amount that you owe: If you have received a written notice from the IRS that includes an amount that you owe in back taxes, you should check this against your tax returns to ensure it is an accurate reflection of your debt. Your calculation may be different than the calculation the IRS has made, so it will be helpful to know the amount you actually owe. This will include the debt plus any interest and penalties accrued.
- File all tax returns: Even if you cannot pay what you owe, it is extremely important to file your tax returns each year. If you do not, you disqualify yourself from several important and possibly helpful programs that could settle your debt without paying it in one lump sum. Filing your returns on time automatically reduces the number of penalties the IRS will charge you. Penalties and interest can add up fast and compound your problem.
- Face your problem sooner rather than later: The longer you wait to address your back taxes, the worse the problem becomes. The IRS may not contact you for a period of time about your back taxes, but they will eventually want a payment. The longer you wait to address the issue, the more you will owe in penalties in interest and the more difficult it will be to pay.
- Do you qualify for a payment plan?: The IRS offers installment agreements to many taxpayers who owe money to the IRS. This allows you to pay your debt (and interest and penalties) over time via monthly payments, rather than a large lump sum. Just like a credit card, you will have a minimum amount due and as long as you pay on time. It’s possible to resolve your debt in 72 months. In some special cases, you might also find that you qualify for what is known as an Offer in Compromise, an agreement where you can settle the debt with the IRS for less than you owe.
- Complete a financial review: Whether you qualify for an installment agreement, an Offer in Compromise or not, this is a good time to do a thorough review of your entire financial picture. If your credit is good, you can elect to pay for a portion of your debt with a credit card, or if your finances are not as strong, you could consider bankruptcy. However, we strongly encourage you to consult a tax professional before taking those measures.
Get Out of Tax Debt Once and for All!
Success Tax Relief understands the stress of not knowing how to pay off your back taxes to the IRS. Our team can review your financial situation and help you determine what course of action is best for your unique situation. In addition, our team can work directly with the IRS to shield you from the stress of what can sometimes be stressful communication. For more information, call Success Tax Relief today at 877-825-1179 or contact us online.