Plenty of situations can have a surprising impact on your credit score. Are IRS installment agreements a part of your credit report? This is an important question to ask if you carry tax debt and worry about your financial future.
Discover what an IRS payment plan means for your credit score and how you can build good credit despite your tax debt.
You may acquire federal tax debt if you fail to file tax returns or pay your share to the Internal Revenue Service. To relieve your debt, you could make a lump sum payment or enter into a plan involving monthly payments. Depending on your unique situation, the latter may be the better option for you.
Through an installment agreement, you can spread out the payments into manageable increments. This will not reduce the amount that you owe unless it’s part of a negotiated settlement. Both long-term and short-term plans may be available, each having different fees and payment timelines.
Will you see an IRS installment agreement on a credit report? Does entering a payment plan hurt or help your credit score? It’s normal to worry about unpaid taxes affecting your credit.
There is good news, however. Many moves from the IRS won’t directly impact your credit score. An audit, a soft credit report inquiry, and even a payment plan setup shouldn’t appear on your credit report since the IRS doesn’t report to credit bureaus.
This doesn’t mean that there isn’t a possibility of your score decreasing. Consistently missing payments could lead to tax liens. Before granting a loan, creditors want to ensure you have a strong payment history, as this makes them confident in your ability to pay back debts.
Suppose you prioritize paying back taxes but miss a car loan, mortgage, or other payment in the process. Falling behind on these payments could cause your credit score to drop.
Although an IRS installment agreement won’t show up on a credit report, you should do everything in your power to prevent it from hurting your credit. Professionals recommend the following tips:
Asking for professional tax help is an excellent way to prevent future issues with the IRS. Accountants, lawyers, tax consultants, and other professionals can offer advice and guide you through future tax returns. If you’re worried about acquiring more tax debt and penalties, consider reaching out to a trusted firm like Levy & Associates, Inc.
While an IRS installment agreement won’t appear on a credit report, it can potentially impact your credit score, especially if you don’t make payments. Sorting out your financial concerns can be overwhelming. Let an experienced tax professional guide you during this process.
Levy & Associates, Inc. assists taxpayers with a wide range of issues, including IRS audits, levies, unpaid back taxes, and more. An experienced team of lawyers, accountants, and other tax professionals leads our services.
Do you need tax advice from a knowledgeable source? Connect with us online or contact a firm near you by calling 800-TAX-LEVY.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.