As our wise forefather Benjamin Franklin once said, "In this world nothing can be said to be certain, except death and taxes." As much as you would want to escape it and deny its existence, taxes will find you. Or more correctly, tax collectors will find you. As much as possible, avoid delaying payments on your income taxes because much of the annoyance with the IRS stems from trying to catch up on payments, deadlines, penalties and such. Thankfully, the IRS does allow extensions!
But if you’re reading this article, you may already have found yourself in a depressing rut. One should not be too overwhelmed as you can and WILL be able to pay off your IRS debt. Here are a few ideas on how to pay it off fast.
Before anything else, you must first be correctly informed of how much debt you really need to pay. Consult your certified public accountant, financial adviser or even lawyer to correctly calculate how much you owe the IRS. If you your IRS debt is less than ten thousand dollars ($10,000) you can handle it yourself. Just make sure you have thoroughly gone over your tax returns and have made the necessary deductions. For amounts greater than that, a professional tax adviser is advised.
- Full payment. The fastest way of paying off IRS debt is by paying it in full, but this will of course entail shelling chunk of change you may not have.
- Instalment scheme. Another more flexible means with paying off the IRS is through an instalment scheme but you must course it through the proper officials and inform the IRS before they seize your belongings. Actually, you can apply for a payment scheme if you have less than twenty five thousand dollars ($25,000) in debt. You can arrange for a scheme that will allow you to pay your outstanding debt anywhere from a year to 60 full months. (This is of course including appropriate corresponding interests.)
- Partial instalment agreement. Another approach for you to pay your debt is through the partial payment instalment agreement, in which you can negotiate with the IRS to pay long-term for your debt at a reduced dollar amount. In this type of payment scheme, the individual must pay monthly amounts to the IRS for an agreed amount period of time. When computed in total, the payments will not cover the debt in full, however the IRS will be willing to “forgive” and let go of the remaining amount just as long as you adhere to the payment instalment agreement.
- Offer in compromise. Another scheme much similar to the partial payment instalment program is the “Offer in Compromise.” In this type of program, the IRS is willing that you pay for an amount less than the full payment of your tax debts. This usually is the case when the IRS sees that you will not be realistically able to pay for the total amount.
- Tip. Between the partial instalment agreement and the offer in compromise, the partial payment instalment scheme is the more “friendly” choice as it is less time consuming and the IRS is more willing to settle for this type of agreement than the latter option.