Knowing you owe the IRS money can be stressful. It’s even more concerning if you owe more than you can pay. If this happens to you, you might be tempted to ignore the problem. However, this won’t make the problem go away, and it could wind up costing you even more. Instead, you should look into tax debt forgiveness.
The Biggest Problem With Tax Debt Forgiveness
Ignoring the fact that you owe the IRS money won’t change reality. It only delays the inevitable. In addition, if you don’t apply for tax debt forgiveness as soon as possible, you may not qualify for it or you may have to pay a lot in interest and fees.
As soon as you know that you owe the IRS more money than you can pay, you need to put a plan in place. It’s impossible to hide from your tax debt, so take the necessary steps to take care of your problem. While the IRS may seem scary, you might be surprised how helpful and understanding they can be: but only as long as you contact them early on. And if you work with a professional, they’ll be able to walk you through the process.
How to Fix Your Tax Problems
The first thing you need to do is admit that you have a problem. After you have done that, you can look into the different tax debt forgiveness programs and see what they have to offer. Again, talking to a professional accountant may be helpful in this situation as they’ll be able to inform you of your options and help you apply.
One of the most common ways to take care of your debt is to apply for a payment plan. The IRS probably won’t completely forgive what you owe unless your circumstances are dire. But to pay back your debt, your best option may be to set up a payment plan.
Like most payment plans, you will have to pay interest and a specific amount each month until the debt is paid off. However, paying small increments over time may be more affordable than paying one lump sum. It’s best to let the IRS know as soon as possible that a payment plan is the tax debt forgiveness route you want to take. Interest will accrue as long as you don’t pay your debt, adding more money to what you already owe.
Offer in Compromise
Depending on your financial situation, you can also apply for the tax debt forgiveness program known as Offer in Compromise. For this program, the IRS will examine your finances and determine your ability to pay back your debt in a timely manner. If they find that there’s just no way for you to pay, they may forgive your debt entirely.
Qualifying for this program is incredibly difficult. The IRS wants their money, so very few people are granted an Offer in Compromise.
This is also referred to as Currently Not Collectible. If making payments toward your tax debt will place you in financial hardship, then the IRS may defer your payments until you are in a better financial position. If your situation never changes, then you may be able to get away with never paying your taxes. However, the IRS will reassess your situation regularly to determine your ability to pay.
Solving Your Tax Debt Problems
Ignoring your tax debt is not the best course of action to take. It will end up costing you in the long run. Getting help and finding the best tax debt forgiveness program is a better option. Contact Geaux Tax Resolution today to see what options will work for you to solve your tax debt issues.