Let’s face it, no one wants to owe money to the government but it can happen to any one of us at any time. Owing more taxes than you expect can occur in any number of ways such as excessive capital gains through stock sales, not paying enough taxes throughout the year, not filing tax returns at all or simply exaggerating your deductibles. Tax debt problems can happen but there are ways to reduce your tax liability without losing everything you own.
Personally, I innocently double-dipped on some taxes for a relocation payment I received. I thought taxes were already taken out of the check so I included the amount ($5,000) as taxes paid on my tax return. Unfortunately, I was wrong. Not only did I owe the 5k in taxes but also the amount I received as a refund because I added it to my return. Luckily for me, this was not a massive error in judgement but it could have been much worse. The best thing I did was to accept my mistake and take care of the problem.
Don’t ignore the problem – The worst thing you can do is pretend this is not happening to you and hope it all goes away. If you ignore the problem, it will, in fact, get much worse. Even before the IRS contacts you about a problem, they have already added penalties and interest to the amount you own.
For every week and month that goes by without a resolution, the penalties and interest will increase and the IRS may even impose liens on your property. Do the right thing and contact the IRS to understand the situation before it’s too late.
Assess your situation – Once you have spoken with the IRS and confirmed that you do indeed owe back taxes, you’ll have to decide whether you can manage to pay the debt with seeking outside assistance.
In order to reduce or eliminate fees that continue to accrue while the debt is owed, you’ll need to pay the amount in full. If you can only manage a payment plan, interest and penalties will continue to be added to the total, making your debt even larger. Depending on the amount you owe, it may be wise to seek professional assistance and have them work with the IRS for you.
Get professional help – If you are unable to pay your tax debt, professional tax debt experts can help you with your IRS problems. They can negotiate with the IRS on your behalf as well as agree on a settlement with an affordable payment plan. The benefit of this is that no more penalties or interest will be added while you are paying off the debt.
Professional tax debt experts can help you resolve and possibly reduce the amount you owe. You’ll be able to enjoy your life once more, no longer wondering if you’ll be able to pay off your debt or if your property will be seized by the IRS.