The following is a guest post from Audric Stevens.
Falling behind on your tax payments could be an alarming situation. The intimidation of wage garnishments and tax levies or even property foreclosure is a very latent possibility if you fail to make your tax debt payments. Tax debt takes place when you do not pay the right amount on your taxes. This may happen due to a number of reasons. Firstly, you might get wrong with the tax calculation and thus end up paying less than you ought to. Secondly, it could be due to inadequate record maintenance. If you claim tax rebates and later fail to prove that your claims are valid, you may end up accumulating a huge amount of tax debt. Lastly, you might have spent your income in other fields of personal necessities, and thus unable to pay your tax dues. Whatever the reason might be, the fact remains that you need to find debt help. If you have a huge amount of tax debt that you cannot afford to pay, there are several tax debt relief options for you.
Get in touch with the IRS
When you know that you won’t be able to pay off your tax debt, you should contact the IRS or Internal Revenue Service. Once you do this, you’ll be asked for financial details as well as any financial adversity. It will then try to make a repayment arrangement that’ll suit your financial circumstances. The most terrible thing that you can do is to disregard notices received from the IRS.
Tax debt settlement
If you cannot afford to make your tax debt payments, one of the prospective options is to consider settling your debts. Some debtors may be allowed by the IRS to settle their debt for less than what they owe. This practice is commonly referred to as an Offer in Compromise, and it’ll help you save a substantial amount of cash on your taxes. However, this debt relief option will work only if the IRS is convinced that you cannot pay the total debt amount that you owe.
Installment payment option
Another option that you may consider is arranging an installment contract with the IRS. If you do not meet the criteria for an offer in compromise or you have previously used it, the installment contract is the next best alternative. With the help of an installment agreement, you’ll be able to set up a reimbursement plan with the IRS over a longer period of time.
Under some instances, it may be advantageous for you to borrow funds to repay your tax debt. In order to do this, you have the option of obtaining a personal loan or draw on a home-equity loan. Thus, you’ll be able to wipe out your tax debt, and concentrate on making payments to your creditor. If the interest rate that you receive is lesser than the rate mentioned in the installment contract with the IRS, this can make sense economically.
Thanks Audric for these tips. As you guys can see, being in debt to the taxman is not the end of the world and there are some solutions out there. Another great way to relieve some of your tex bills is to make a car donation. See this page for full details, or if you are in New York, visit the Car Donation NYC page.