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Do You Owe The IRS Money?

August 2nd

Thankfully we have made it to the mid-tax year and won’t have to worry about taxes again for another six months.  Not everyone was so lucky, so what about those who owed IRS more than they can afford to pay this past tax season? It is more common than you would think for taxpayers to end up owing the IRS with no way to pay their tax debts.  However, there are some options available that allow the consumer to satisfy their responsibility to the IRS while maintaining other financial obligations.

IRS Payment Options

In many cases, taxpayers only need more time to pay their tax debts. If you will be able to make a full payment over a course of 120 days, the IRS may allow a short term extension. You may end up paying a little more in interest fees, but you won’t be penalized with delinquency fees.

A more popular method for paying your tax debts is through an installment payment plan.   An installment plan allows for you to repay your debts over a specified period of time if you (1) owe less than $25,000 and (2) are current on filing your tax returns.  For those that are self-employed, you must be current on your quarterly estimated tax payments in order to receive approval for an installment plan. There is an application fee of $105, or $52 if using a direct deposit system for payments.

Another option is an offer in compromise, in which the IRS agrees to accept less than the amount owed. These cases are rare and require proof of extenuating circumstances leading to a financial hardship. This option is a last resort method for anyone needing to pay their IRS debts without the finances to do so.

Get Help From A Professional

There can be drawbacks to any of the repayment options and it is best to consider your financial situation when deciding between payment options. Although the IRS allows consumers some flexibility in paying tax debts, it is important to review your options with a qualified tax professional. Many tax lawyers can help you sort through your financial situation and help you get out from under your tax debts.

 
 
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