Each year, you must file your tax return and risk incurring additional tax liabilities. Receiving your tax statement after filing might be aggravating – but it can also be daunting, especially if you already owe money on your taxes. Due to the rapid accumulation of unpaid taxes, you may find yourself in severe debt as you attempt to return the money you owe the IRS. There are, however, measures available that may be able to alleviate this load. If you want to reduce the amount of money you owe on your past taxes, look for tax debt reduction options online.
There are several options for lowering your tax debt. It's critical to know your alternatives, whether you engage directly with the IRS or hire a tax debt settlement consultant. Learn more about tax debt relief and how to take advantage of it by doing a web search.
If you want to get rid of your tax debt, you have a few options.
A Payment Plan with the IRS
If you have tax debt, the first thing you should do is pursue an IRS payment plan. It's one of the simplest ways to obtain help, and anyone can qualify for a payment plan, regardless of their tax debt.
An agreement is a contract between you and the IRS. That contract specifies how much money you owe, how long you'll pay it back, and how much you'll pay each month. The IRS usually won't garnish your income, confiscate your bank accounts, or seize your property if you're on a payment plan and making monthly payments toward your debt. You will, however, be charged interest and penalties if you are late with your payments.
You can pick between two payment plans: short-term and long-term. Short-term payment plans spread out your tax debt payback across 180 days and are appropriate for anyone with a tax obligation of $10,000 or less. Long-term payment plans stretch repayment out over a period of 120 days or more, and they're the greatest option for people who owe $50,000 or more.
Before filing for an IRS payment plan, check to see if you qualify online.
Select the “Currently Not Collectible” option.
You can also request that your debt be set to "Currently Not Collectible" status directly with the IRS. This is a specific note that permits you to defer making tax payments until you have the funds to do so.
When you can't afford to pay your taxes or make payments on your debt, a loan may be provided. It's essentially a technique to postpone your payment while waiting for IRS approval. The IRS will not garnish your earnings, levy your bank accounts, or ask you to set up a repayment plan if you are awarded Currently Not Collectible status. Your debt, on the other hand, does not vanish; what vanishes is the imminent threat of having that debt collected. While you're in Currently Not Collectible Status, the balance will continue to accrue interest and late penalties, causing your debt to rise.
To acquire this status, the IRS must conclude that you are unable to settle your tax liability due to financial hardship. The IRS will need to evaluate if paying your tax obligation will leave you unable to pay for basic living expenditures such as rent and utilities. You'll have to meet some IRS requirements, but you can look them up online to see what you'll need to qualify.
Submit a “Offer in Compromise” to the Internal Revenue Service.
Finally, you can try to settle your debt – and get rid of it without paying the whole amount owed – by sending a “Offer in Compromise” to the Internal Revenue Service.
A debt settlement agreement is essentially what it sounds like. You can reach an agreement with the IRS to pay less than the whole amount you owe and have some of your tax liability eliminated.
The IRS will usually approve Give in Compromise agreements if you offer an amount that they can collect over a "reasonable length of time" — which means you won't be able to achieve an agreement that entirely eliminates your tax burden. It can, however, dramatically reduce the amount you owe and help you pay off your debt more quickly.
To be considered for an Offer in Compromise, you must first apply and ensure that you are eligible. your specific facts and circumstances, such as your income, spending, and assets Before you start applying, do some research to see if you qualify for the Offer in Compromise programme.
Take Advantage of a Tax Debt Settlement Service
You have options if you're having trouble paying your tax burden. However, you might not be aware of all of your possibilities. That is why, before taking any action, it is a good idea to consult a tax debt settlement agency.
A tax debt settlement agency can assist you with the settlement or reduction of your debt. They can introduce you to various repayment choices and assist you in weighing all of your options. They may also be able to assist you in locating tax debt alternatives that you were previously unaware of. Find tax debt settlement professionals and services in your area by searching online. It could make a huge impact in your financial situation.