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Certain Tax Cuts Set To Expire

October 3rd

Some tax cuts enacted in early 2000 are expected to end this year. When they do, the additional taxes and related payments are estimated to cost some Americans almost $5,700 per year. Understandably, many are speculating on how the expiry of these cuts will affect their financial standing. Median household income decreased sharply after 2008, and although it’s improving, it’s still below the levels of the year 2003.

Paying Your Debt As Quickly As Possible

No matter how large your amount of back taxes, the IRS will work with you, assuming you have come forward in good faith and can demonstrate your inability to pay your tax debt. The IRS has processes in place to set up payment plans and reduce the amount you owe.

First, consult with a qualified tax debt lawyer to analyze your previous returns closely. It’s not uncommon to discover that due to errors in previous filings, you may actually owe less than you think.

Once you know exactly how much you owe, it’s time to consider options. If you owe so much that you cannot pay off the debt now, then you should look at the Offer in Compromise. Designed for taxpayers who are experiencing financial hardship, the Offer in Compromise can reduce your tax debt by a significant amount based on income criteria.

However, let’s say you can pay off your tax debt — but only over time. Then the Installment Agreement is likely your best option. With the Installment Agreement, you’ll make a monthly payment that over time will satisfy your tax debt.

 
 
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