In seeking relief from a tax debt, a taxpayer may pursue a formal resolution, such as an installment agreement, or a temporary resolution (such as currently not collectible). When deciding on an appropriate solution, a taxpayer must ensure that he or she can meet the requirements and conditions of the agreement. Key factors to look out for that can impact tax debt resolution are discussed below.
Tax Debt Relief: Begin Resolution as Soon as Possible
As soon as you’re made aware that you owe back taxes, you should begin looking for ways to resolve it. Resolution doesn’t always mean paying the full tax debt amount. If you don’t have the financial ability to pay the full debt amount at once, you can apply for IRS payment plans. Depending on your circumstances, you may qualify for an offer in compromise, a partial payment installment agreement, or currently not collectible status.
Tax Debt Relief: Find Help or Gain Knowledge
It’s helpful to have a basic understanding of IRS policies when a tax debt needs to be handled. If the amount you owe is sizeable, you may want to look for professional assistance. On the other hand, if you’re confident of handling the debt yourself, it’s smart to research details about the type of tax problem you’re facing. If you can’t afford to hire outside help, you may seek assistance from IRS’ low income taxpayer clinics.
Tax Debt Relief: Calculating the Tax Debt
If you’ve received an IRS notice regarding a tax liability, you’ll be advised how much you owe and options for paying. When you do not file your tax return, the IRS uses information from third parties to estimate the debt amount. Note that the IRS does not include any deductions or credits that you may qualify for. If you file your tax return after receiving a notice from the IRS, you may request them to correct the tax debt amount. If, on the other hand, you do not respond to their notices, the IRS will consider their estimation final.
Tax Debt Relief: Choose a Payment Plan Wisely
The payment plan you choose should allow you the most benefits, depending on your situation. The IRS has various options that are designed to allow you to comfortably resolve your tax issue. Regardless of your financial condition, you can achieve a resolution through a payment plan that makes the most sense for you and your budget.