3 Tips For Dealing With A Large Tax Debt
Being in debt is stressful, but it can be even more stressful when that debt is owed to the IRS. If you end up with a bigger-than-expected tax bill, owe a large amount of back taxes, or otherwise owe a large debt to the IRS, it's time to take action and get your debt under control. Otherwise, you risk getting behind, the debt becoming larger due to fees and penalties, and even potentially facing a tax levy or wage garnishment. Instead of panicking, however, simply follow these three tips for dealing with a large tax debt:
Don't Avoid Communicating With the IRS
Many people are intimidated by the IRS, but the truth is that IRS agents want to work with you. If you've been receiving letters about your debt, it's time to sit down and look at what you owe honestly. Once you have a handle on what you owe, determine how much you can reasonably afford to pay up-front, as well as what you can afford to pay monthly.
From there, call the IRS at the number listed on the letters you've received and ask about your payment options. In many cases, the IRS will offer you an affordable payment plan instead of making you pay the entire bill at once.
Consider an Offer in Compromise
An offer in compromise means that you essentially settle with the IRS to pay a percentage of your total debt in lieu of paying the entire bill. You have to navigate an application process and meet strict income requirements in order to qualify, but if you do so you can save a great deal of money. The best way to apply for an IRS compromise is to hire a tax attorney with experience in this area. They will help ensure you meet the requirements and that all of your paperwork is in order and submitted correctly.
Avoid Future Tax Bills
Another important step in getting your tax bill under control is to work hard to prevent it from growing in the future. Be sure to consult an accountant to discuss how you ended up with the large tax bill in the first place as well as specific steps to take to avoid the same thing happening again moving forward.
By following these tips, you will soon regain control of your tax debt situation and gain more peace of mind at the same time.