Do you finally want peace of mind? With an IRS debt held over your head, you simply can't find it. So it's time to get started on the road to a debt-free life. Negotiating with the IRS can be very difficult if you owe back taxes. But ignoring your IRS tax debt is the worst thing you can do. That's because interest and penalties add up and make small liabilities grow into huge debts, and fast! The following tax advice can help.
Are you current with your tax filings? If you're not, that's the first step toward settling your IRS back taxes. You cannot qualify for many tax programs that will save you money if you are not current. Additionally, failing to file your taxes is a criminal offense. The IRS can take you to court and if you are found guilty you could face 3 years of jail time. Not to mention the huge bill for the court costs. So get caught up and start paying back taxes!
Once you are up to date with your tax filings, you can start solving your tax problems and get some IRS tax debt relief. Here are the most popular options utilized.
Pay the amount in full. This may seem like the obvious option, but even if you don't have the funds on hand to pay, you may still use other resources to come up with the money. Here are a few options for paying the amount in full.
- Consider a home equity loan. If you own a home that is valued at a price higher than what your current mortgage balance is, you can borrow on this amount. You can use this money to pay off your taxes owed and then you will just have to make monthly payments toward this additional amount you borrowed in the form of your mortgage payments. This is a great option because the interest rate is much lower than if you borrowed on credit.
- Borrow from friends and family. Only a good option if you know you can pay back soon. If you can't, don't pass that burden onto family and friends because there are other methods of settling with the IRS.
- Auction off some of your assets. Consider going through your attic or garage and finding things that have monetary value. Best place to get the most money for them is by putting them up for auction on eBay. You will be surprised to see how much money you can acquire quickly by doing this.
- Borrow on Credit. This is a good option if you can pay off soon. If you cannot pay off soon, this option is not for because the interest you will be paying is much higher than payment options available directly from the IRS.
Pay Monthly to the IRS. This form of agreement is called an installment agreement. Under this agreement the IRS will allow you to pay back the taxes owed in monthly increments. If you owe less than $25,000, the IRS will allow you to set this up online or by filling out IRS form 9465. If you owe more than $25,000 the IRS will give you a very hard time and it is best to hire a tax professional to help you work with the government agency to come up with a payment plan. If you cannot meet the minimum monthly payment requirements with an installment agreement, it is likely that you can qualify for a different payment method.
Get an Extension. If tax time is coming up and you know you will not be able to pay the amount due, you can file an extension with IRS form 4868 and this will save you the 5% per month late filing fee you would receive otherwise. If you already have taxes that are owed and due, you can request short-term extensions simply by requesting it from the IRS. It is as simple as asking for an additional 45 days to pay. This is the maximum amount of time you can ask for before the collection system picks up again, but you can easily do this again 45 days down the road if you make it clear you are trying to pay, normally including a small payment with the request will do.
Consider an Offer in Compromise. This method exists for those individuals that cannot pay their back taxes with any of the previous methods. This is one of the most difficult forms of settlements to obtain because if the IRS accepts the compromise, the amount you pay is normally far less than your original tax amount owed. Don't think that just anyone can receive this; you really need to be nearly asset-free to receive this settlement. You must be able to prove to the IRS that if they were to use forceful collection mechanisms through levies and liens, they would likely not even collect the amount that you will pay them through the offer in compromise.
This tax advice will help you pay your back taxes. There are over 40 ways to pay and settle back taxes with the IRS. Which category you fall into really depends upon your unique financial situation. It is highly suggested that you use a tax professional when dealing with IRS tax debts. Many professionals are former IRS agents themselves and are trained to find you the best payment option.
If you need help with with paying back taxes please visit the site to find more detailed descriptions of different payment methods.