With tax season quietly approaching, it’s a good time to bring up the fact that filing a return is a no-brainer for any taxpayer. But if you find yourself with an overwhelming bill that you can’t pay in one go, do not skip this year, by any means.
If you’ve found yourself in a ditch unable to pay your taxes this coming year, it’s not as scary an idea as you think.
Well, it is obviously a problem no one wishes for but there are options available to get you out of more trouble than you need to be in.
But before you do anything, it’s important to know and understand these options and the consequences of each. Here are the basics on how to handle your tax debt if you can’t pay.
Think about an installment plan
If you end up owing money on your taxes, you may be wondering what your options are. One option is to file for an IRS installment plan. With this type of plan, you agree to make monthly payments to the IRS until your tax bill is paid off. There are a few things to keep in mind if you’re considering this option.
First, you’ll need to fill out a form known as the “Installment Agreement Request” (Form 9465). This form will give the IRS some basic information about your financial situation and why you’re unable to pay your taxes in full.
Once you’ve submitted the form, the IRS will review your request and decide whether or not to approve it. If your request is approved, you’ll be required to make monthly payments until your tax bill is paid off.
Keep in mind that there may be some fees associated with setting up an installment plan, so be sure to factor that into your budget. If you have any questions about whether or not an installment plan is right for you, be sure to speak with a tax professional.
File for an offer in compromise
If you owe money to the IRS and you can’t afford to pay the full amount, you may be able to file for an offer in compromise. This is a program that allows taxpayers to negotiate with the IRS on incorrectly calculated tax liability for a reduced amount.
To qualify, you must demonstrate that you cannot pay the full amount owed and that paying the reduced amount would be unfair. The process can be complex, so it’s important to seek professional help if you’re considering this option. If you do file for an offer in compromise and it’s accepted, you can choose between making a lump sum payment or agreeing to a payment plan.
Pay what you can, when you can- it’s better than nothing
Please don’t be discouraged by an overwhelming tax bill and skip filing a return, because the consequences can be much direr than sending in what you can afford at the moment. Another option is to request an extension, which will only extend the period of time you have to file. If anything, file a return initially and send in payments little by little.
Not filing at all will land you a larger penalty than if you sent in whatever payment your budget allowed you. That’s why you should NEVER skip out on filing.
Is it necessary to get help from a tax professional?
The IRS can be tricky to combat at times, but that doesn’t mean it’s always necessary to consult with a tax professional. That’s not to say that professional help is unnecessary, but there are times when you’re better off by yourself.
In the cases that you aren’t sure what to do to relieve your problems, it is in your best interest to consult with a trusted professional, whether it be a certified public accountant, a tax resolution specialist, or a tax attorney if you require legal assistance.
Unfortunately, far too many taxpayers fall victim to tax resolution firms that overcharge and underdeliver – sometimes they even leave their clients off worse than where they started! It’s crucial to be thorough with your research when searching for professional assistance.
Luckily, no client of Elite Tax Resolutions has ever had that problem. We have a proven track record of satisfied clients that have come to us in dire need and come out of the other side living a stress-free life because of the guidance they received from us.
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