Most people fret when tax season arrives, as they are unable to pay their taxes and manage their debt at the same time. The Internal Revenue Service, or IRS, keeps a strict watch on taxpayers and impose heavy late fees on those who fail to pay their taxes on time. However, it also offers numerous relief programs to help those in need. If you are unable to pay your tax bill, follow these steps to resolve your debt with the IRS.
Request Payments in Installments
If you are able to pay your taxes but cannot pay them at once, you can be eligible for paying your taxes in installments. Such programs follow a similar structure as the home mortgage plans; the only difference is that you must pay the IRS in this case. To be eligible for such installments programs, you must meet certain criteria such as having a clear record of paying tax returns to date, paying late fees on time, and obliging to pay the minimum installment amount generated by the IRS.
You can also hire an experienced attorney or a tax professional to minimize your tax debt. They will also help you file requests for relief programs that most people are usually unaware of. By taking help from a tax professional, you can not only take advantage of such relief programs but also settle high penalties and interest. Hiring an expert is recommended if your debt amount is more than $25,000.
File for an OIC
Upon filing a request, you can convince the IRS to let you pay your debt in installments or through a lump sum amount. This is only applicable for candidates who suffer to make ends meet or those who will suffer a major loss upon paying their taxes. The amount you owe in taxes will be reduced by the IRS, after which both parties will enter a settlement. This arrangement is often referred to as an offer in compromise or OIC.
If you are eligible, you can be exempt from paying up to a quarter or more of the debt amount you owe. As suggested by the blog post, The Solution To Tax Debt, you must not be tempted by TV commercials and ads that promote IRS debt relief through IRS penny payment on dollars, as they can be extremely misleading. Keep in mind that this relief is considered by the IRS only if you fill the concerned form and pay a fee of $186.
You will be asked to fill in personal data including your name, address, type of work, income, assets, spending habits, investments made, and details related to your financial portfolio and equity. In case you are self-employed or work per project, you will be asked to provide a collection information statement to ensure and evaluate your ability to pay the tax amount you owe. If the IRS concludes that you are eligible to pay the taxes in full or in installments, your OIC application will be rejected.
Look into Spouse Programs
The IRS also offers relief programs to married and separated couples that owe tax money. At times, legally separated individuals do not adhere to joint tax returns and fail to pay their debt. They often feel that they are not liable to pay taxes for their ex-partner once they are legally separated. However, this can lead to underpayment and piling of tax debt, which is often difficult to pay back at some point. If you find yourself in such a situation, you can look into several spouse programs offered by the IRS as a part of tax relief.
In some cases, a partner shadows a tax liability from their former spouse, which keeps them in the dark and a target of the collected debt. If they can gather evidence and show that they were misinformed or misled through credit deductions by their former spouse, they can be eligible for innocent spouse relief. Once their application is considered, they get up to 2 years to repay their debt.
Two other forms of relief provisions for couples include separation of liability relief and equitable tax relief. While the former is applicable for spouses who are legally separated and live separately for over 12 months, the latter is applicable for those who can show missing reports on joint return taxes.
With these tips in mind, you can resolve your debt with the IRS and finally breathe a sigh of relief. Even though the IRS keeps a strict watch on taxpayers, it does offer helpful relief programs and plans for those in dire need. If you are currently in a pinch, take advantage of these programs so you can get back on track.