by Clare Louise | August 20, 2018 9:53 am
Owing the Internal Revenue Service and entering into tax debt can be a very stressful and scary thing. Unpaid taxes can lead to liens on your home, the freezing of your bank accounts and the garnishment of your wages. Luckily, the IRS does allow payment plans to help you to pay off any money that you owe to them. Here we will discuss some of the options available to you to set up an IRS payment plan and how reduce or diminish your tax debt.
Figure Out How Much You Owe This should be the first step in your process. Figuring out how much you owe can determine whether or not the IRS will accept your payment plan. The IRS will usually not accept your terms for a payment plan if they believe that you have the ability to pay the full amount of your tax bill at once. If you believe that you will not be able to pay the amount due by the IRS even with a payment plan then you may qualify for what is called an offer-in-compromise. This is when you agree to pay the IRS less than what you owe them. This is typically used as a last resort. To qualify, the IRS essentially tries to determine if you really can not pay them based on how much you make, your assets and expenses.
Request A Payment Plan To qualify for a payment plan, you must owe less than fifty thousand dollars in taxes. This figure includes any penalties and interest that has been applied to your tax bill. You can apply for the payment plan online at the IRS’s website. If your tax bill is less than twenty-five thousand dollars, then you must pay it off within five years. If it is more than twenty-five thousand dollars, then you must fill out the Form 433-F. Through this form, the IRS will place a lien on some of your assets. If you fail to pay off your tax debt, then the IRS will place a levy on your assets which allows them to take possession of them. When setting up a payment plan with the IRS, it can be wise to utilize a tax accountant, perhaps one that specializes specifically in tax debt. This can help you make sure that you are getting the greatest possible deal and terms with the IRS. A tax accountant can also make sure that you are applying for any and all programs that can help reduce your tax debt. He or she can also help you setup your finances so that you never again go into tax debt again.
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