Tax Debt HelpTax debt help is available for those individuals that can’t pay their tax liabilities. The first thing to do is to not avoid the tax problems as they won’t go away by themselves. There are several things that you can do if you find that you can’t pay your taxes.

The number one mistake that individuals make when they realize that they can’t pay there taxes is to not file their return. You need to file your return properly and on time to avoid late filing penalties. You should also include as large a partial payment as you can afford. You must understand that the IRS can seize and sell your property to cover your tax debt so you should get all the tax debt help that you can find.

The IRS can offer you arrangements whereby you agree to installment payments or extension procedures. So, it is better to stop the collection process by making arrangements with the IRS. You can get tax debt help from a tax professional but they will charge you quite a bit or you can start with the 4 tax debt help solutions below.

1. You Can Pay Late

Like I said above, even if you can’t pay in full you should still include a partial payment. If you know that you make the payment in the near future then you should pay as much as you can to lessen the interest and penalty charges. After about 45 days, the IRS will bill you for the balance due which you can then hopefully pay off.

If you can’t pay the balance then, again, make a big a payment as possible and then wait another 45 days for the next bill. You might be able to pay off the tax debt after two or three billing cycles without having to make a more formal arrangement with the IRS.

Just take into account that you will have to pay a 0.5% monthly late penalty on the balance plus interests.

2. Borrow Money

It is never nice asking to borrow money from friends or family but it isn’t nice either to have the IRS harassing you for tax payments. Another option can be to take out a bank loan to pay off your tax debt. Just make sure that you have the means to make the monthly payments to the bank or whatever arrangements you made with your friends or family.

3. Installment Agreement

Another possibility is to make an installment agreement with the IRS. This will involve more paperwork but it is still better than not paying your taxes. This option is available for individuals who owe less than $25,000 and you have to pay off the balance within 5 years. Again, you will have to pay a late payment penalty plus a one time user fee.

4. Extension of Time for Payment of Tax

As a last resort you can apply for an Extension of Time for payment of tax due to undue hardship. If you can’t pay your tax debt and you can’t sell any assets or borrow money, then the IRS might agree to a 6 month extension. You will have to file more documents as you will be required to present all your credits, debts, income, and expenses statements for the last 3 months.

Summary of Tax Debt Help

Remember, do not avoid your tax debts but instead find a solution that helps you to repay what you owe.

Did you know that the average American spends 32% of their income on taxes, and that is not just federal income taxes. There’s also state income taxes, local income taxes, employees payroll taxes, sales tax, excise tax, and property tax.

Would you like to know how the IRS settles for less than you owe? If you qualify, you can settle your IRS debt for 15% to 40% of what you owe. Find out how…

About

William has been interested in the economy and the financial markets since a teenager. Michael writes about How to Manage Your Money and offers personal finance advice and tips.

Recommended Reading