It is that time of year again. The tax man has come and gone. For those of us that owe the IRS, we have been left a little poorer for the visit. If you are an individual or small business owner and find yourself indebted to the Internal Revenue Service, we have some tax debt tips that may help your situation.
Tax Tips for Taxpayers That Owe the IRS
Many taxpayers view the Internal Revenue Service (IRS) as an ominous organization, out to siphon every penny it can from tax filers. In that light, owing money to the IRS can be a scary situation and leave those in debt frightened that the government will garnish their wages or take their home. The truth is, however, so long as you are honest and up-front with Uncle Sam, there are many options available for you to pay down your tax debt without losing your house and the clothes off of your back!
Check Your Tax Filings
If you prepare your own taxes, it can be fairly simple to make a costly mistake. A misplaced zero here or missed deduction can quickly diminish your tax refund and leave you in the negative. Even professional tax preparers can make mistakes. Tax law and tax regulations change frequently, and as such, it is always a good idea to double check your tax filing if you find that you owe money.
If you hired a certified public accountant (CPA) or tax preparer to handle your filing, don’t shy away from asking them to double check the paperwork if you find yourself owing the IRS. A good CPA will always have your best interest at heart and shouldn’t mind performing their due diligence.
Consult a Tax Professional
If you opted to prepare your own taxes and the end result was that you owed money, then you should definitely consult a tax professional. A good CPA or accountant lives and breathes tax law and will usually be able to help reduce your tax liability. This is especially important for small business owners, who can benefit greatly from a relationship with a CPA – not only during the tax season, but year around, as accountants typically handle all manner of financial advisory.
Installment Payment Arrangement
Ideally you will be able to foot your tax bill immediately. If you find yourself unable to pay the full amount at the time it is due, however, you have several options. Perhaps the most common of these choices is to ask for an installment payment arrangement.
This “arrangement” allows you to make monthly payments to the IRS until your tax debt is paid in full. You will want to pay as much as you can to avoid added interest and fees, but if you need it, you have a total of 3 years to complete payment.
Always Communicate with IRS Tax Collectors
While the urge may be to avoid the IRS tax collectors, you would do well to not choose this decision. Always communicate with Uncle Sam and follow directions. If you fail to do so, you could find yourself facing a tax lien, wage garnishment, a levy of your bank account, and, in severe case, the seizure and sale of your property.
However, if you communicate with the tax collectors and follow-through with your end of the bargain, you will find the IRS to be more than willing to work with you to pay off your debt.