One of the most stressful things a person can deal with is tax debt problems. Everyone pays taxes, whether it’s the Alabama 10 cent playing card tax or the 10% to 39.6% income tax charged by the government. For those who don’t pay on time or at all, as interest accumulates and, in the worst case scenarios, as levies take effect, tax debt can result in financial ruin. Fortunately, there are tax debt solutions that can help taxpayers to pay what they owe and get out of debt.
Filing taxes has gotten increasingly easier over the years. By 1989, 36 states allowed taxpayers to e file their taxes, and by 1990, everyone could. Still, many do not pay their taxes or drastically underpay. In these instances, the IRS is legally obligated to give taxpayers opportunities to argue their cases before exacting the most feared weapon in the IRS arsenal: the tax levy. The IRS can legally seize property to pay for tax debts including portions of wages, assets, and even homes. It has been a myth for many years that it is acceptable to ask an employer temporarily fire a tax debtor in order to stave off wage garnishment. However, it is important to know that such measures are criminal offenses. Federal law provides for a fine of up to $1,000 and imprisonment for up to a year for any employer willfully firing an employee to prevent garnishment of the employee’s earnings.
Essentially there are three major legitimate tax debt solutions:
- Opt to handle your tax debt on your own or with a tax professional.
- Check your original tax returns for overlooked deductions. You can then amend your tax return to lower the amount owed.
- Choose a tax debt plan that fits your financial situation.
DIY Help with Tax Debt
If you owe less than $10,000, you’ll be able to resolve your tax debt on your own. Make sure your original tax returns are accurate and that you can afford the plan you set up. If you owe between $10,000 and $25,000, consider hiring a tax professional. You should also make sure your original returns are accurate and that you can afford the plan you set up. If you owe more than $25,000 you should absolutely contact a tax professional. There are only five tax debt solutions offered for paying back the IRS.
- Installment agreement: a monthly payment plan for paying back tax debt
- Partial payment installment agreement: a long term payment plan to pay back debt at a reduced dollar amount
- Offer in compromise: settle your debts for less than what you owe after making a lump sum or short term payment plan
- Not currently collectible: the IRS agrees to wait for a year or so before collecting on tax debt
- Bankruptcy: discharge all debts under the rules of a Chapter 7 or 13 bankruptcy petition.
For more information, read this website: helpwithtaxproblems.org