What is the Best Way to Settle Tax Debt?
Death and tax are two things you can’t avoid. Trust me; life can be very uncomfortable if you have unpaid tax bills. But you don’t have to feel so bad about it. There are ways you can settle your tax debt without breaking the bank. Here are tips to help you settle your tax debt without stressing yourself.
Don’t Ignore the Problem
The first step in settling your tax debt is not to ignore the problem. Even though you try to ignore it, your tax authority won’t. Try not to delay the filing of your tax returns. And if you can’t pay what you owe, file for an extension. Don’t forget that there are late filing and underpayment penalties. If you fail to file your returns or make any payment obligations, the tax debt will keep growing. This isn’t good in the long run.
Be Realistic About Your Situation
Try to be realistic to yourself. Don’t expect your tax authority to forgive your tax debts or allow you to settle your tax liability for less than you owe. You will only enjoy such a privilege if you are experiencing genuine financial hardship.
Your tax authority will only acknowledge that you are going through financial hardship if you have huge healthcare expenses that offset your income, or you lose your job and don’t have any other way to earn an income.
Handle it Yourself if You Don’t Owe Too Much
It’s sometimes expensive to hire someone to handle your tax debt. If the amount involved is less than $10,000, you should handle it yourself. If you are in the United States, for instance, you can fill form 9465. It’s an application for installment payment of your tax. It allows you to pay the tax you owe, penalties, and interest within 36 months.
Hire an Attorney If You Owe More than $10,000
The payment plans for taxpayers owing more than $10,000 differ. Only an experienced tax consultant or attorney can help you get a better payment deal. Hiring a tax consultant or attorney helps to protect you from tax liens being assessed against you. Having a tax lien assessed against you could damage your credit score. It’s never a good idea to ignore your tax liability. Always try to work things out with your tax authority as soon as possible. Contact us if you need help today.