I Need Help With My Tax Debt — What Now?

I Need Help With My Tax Debt — What Now?

Overwhelmed By Tax Debt? Here’s What You Need to Do FIRST

(DailyDig.com) – It’s tax season, meaning people will be filing their taxes and getting returns, although not everyone is so fortunate to get money back on their taxes. Some have to pay. There are times when people owe so much that they can’t afford to pay all at once, leaving them with tough decisions and sometimes even resulting in them ignoring the Internal Revenue Service (IRS) altogether. Tax debt can be overwhelming, but there’s help out there.

Paying Taxes On Time

Like everything else, there are benefits to paying your taxes in full and on time. Unfortunately for many people, that’s not always an option. Just know if a person does pay their taxes in full, they can avoid a mess of penalties and interest fees. Visit IRS.gov to learn more about the interest and penalties taxpayers can avoid by paying balances by their due dates.

What Happens When People Can’t Immediately Pay?

It’s scary to owe the IRS, leading some people to skip out on paying altogether. The truth is, it’s better to contact the IRS and discuss how you can pay your taxes without paying in full upfront. The IRS offers several ways for people to avoid paying off their balances completely by the due dates.

One such method is an offer in compromise, in which the IRS and the taxpayer settle the issue by coming to an agreed amount that’s lower than the full balance. The IRS doesn’t let just anyone use this, so taxpayers should see if they pre-qualify for an offer in compromise before applying.

In addition to compromising on the amount owed, the IRS also offers taxpayers the option to pay their taxes in installments. Much like with loans, this option includes interest added to the amount a person owes. On top of the taxes filers already can’t afford, penalties for late payments accrue on a monthly basis, adding even more to the taxpayer’s debt.

If a person can find a plan that works for them in the best way possible, they can request the IRS to put a temporary suspension on collections. The IRS essentially labels the person’s account “not collectible” and will temporarily hold off on pursuing any money until the taxpayer’s financial situation improves. Don’t think this means the debt goes away, because it doesn’t; the debt will need to be paid at some point.

Keep in mind it’s better to just pay the taxes in full before or on the due date. If you’re worried you can’t pay your taxes, don’t just ignore the problem. Call the number on the bill or contact the IRS at 800-829-1040 to talk about different options that could help.

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