TAX ACCOUNTING NEWS
If you don't have money to pay what you owe the IRS, you have a few options to work with. Whatever you do, don't ignore the letters from the IRS and don't let your back tax problem go unattended. The IRS has a great deal of power when it comes to recovering money they think is theirs.
When you owe the IRS money, they can garnish your wages, levy your bank accounts, put a lien on your home and seize other assets.
Here's what you can do if you find yourself not being able to pay your taxes. Note, we always recommend getting in touch with a specialized tax resolution professional to help avoid the harsh penalties and interest that accrued on your back taxes. It's far easier to navigate towards tax resolution, if you have a professional working with you. If you'd like to schedule a no-cost confidential tax relief consultation, contact us here.
First, make sure that you file your returns
Even if you have no hope of being able to pay your taxes, you should at least file your income tax returns. Whatever the penalties are for not paying your taxes, the penalties for not filing are much larger. The IRS will remove penalties for not filing and not paying but you have to have a good reason. We can request to have your penalties removed or reduced. It's also important to remember that when you file for an extension, it only gives you more time to file. Your payment date remains unchanged.
Revisit your W-4 withholdings
If your employer withholds money from your salary to pay your taxes with, you shouldn't have to worry about paying anything extra from that income source. If you do owe more, it's a sign that you withholding exemptions are incorrectly reported on your W-4 form. To make sure that you don't get into tax trouble repeatedly, you should make sure your W-4 form is correct and get advice from a tax professional about the kind of withholdings necessary exemptions.
Make a partial payment
If you can't afford to pay all that you owe, you should pay whatever you can. While you will still be hit with interest and penalty charges, they will be smaller than they would be if you paid nothing. These charges are proportional to what you owe the IRS.
Try to work with the IRS
If you can't pay, there are resolution options available to you if you qualify for them. They include a payment plan or an offer in compromise to name a few. You need to first step up and admit to your inability to pay, though.
When the IRS grants you a payment plan, you get to pay your back taxes in installments each month. Applying for a payment plan is easy if you owe less than $10,000 - you simply need to fill out the form online. It can be more difficult to get the IRS to accept a monthly payment plan if you owe $10,000 to $50,000. If you owe more than $50,000, you need to complete IRS form 433-A. Generally once you hit the $50,000 threshold it's advisable that you hire the services of a competent experienced tax professional. If your repayment plan is approved, they can give you up to 72 months to finish paying. You need to pay interest and processing fees for the plan, though.
If your financial hardship is serious enough to preclude the possibility of repayment in the future, the IRS has a program called the Offer in Compromise. You need to prove to the IRS that you will never be able to pay the full amount back even over time.
Contact us if you'd like assistance in resolving your tax problem. To schedule a free confidential consultation, contact us here.
Be sure to not fall for false promises
Scammy so called tax professionals and other con artists know how desperate things can get for people who are unable to afford their taxes. They sometimes advertise on television and radio, promising to negotiate with the IRS to bring your taxes down in return for a large fee without first seeing what IRS programs you are eligible for. You should be very careful before engaging these types of companies. Going to a local, experienced tax resolution professional may be in your best interest.
If you need an expert tax resolution provider who knows how to navigate the IRS maze, reach out to our firm and we'll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem. Contact us.
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