Tax debt refers to taxes you owe to the IRS and have yet to pay in full. The Internal Revenue Service (IRS) has filing deadlines every year for returns and for you to figure out if you owe the government any money. If you do owe money and fail to file or pay back taxes, you’ll accrue debt.
Tax debt may appear daunting, but there are several ways to manage back taxes in a respectful and orderly manner. There are a number of tax solutions that can help with tax debt relief—but only if you take advantage of the opportunities. Continue reading to learn more about tax debt and how you can find relief from mounting back taxes.
Tax debt is any money you owe to the IRS after filing a tax return. The tax return informs you whether you will receive a refund or owe the federal government. The deadline for filing taxes is usually April 15 in normal years.
There are available solutions and relief once you file a tax return if it is determined you owe taxes. Any tax debt that is not paid after filing becomes a debt. The IRS provides ways to get help paying back tax debt if you are struggling.
Every year, hundreds of thousands of Americans end up with tax debt. It is usually because of underreporting or underpaying on taxes. The problem comes about both by honest mistake and on purpose.
Regardless of your intentions, the IRS expects you to pay back tax debt, and there are repercussions if you choose not to follow the rules. Sadly, many Americans avoid filing taxes because they worry about paying back debt. As a result, some Americans falsely believe that it is better to avoid filing taxes than to face debt.
However, it is a mistake not to file taxes on time because there are several assistance programs for delinquent taxpayers. You may feel like your situation is dire, but the most important thing you can do is stay calm and evaluate your options with the help of a tax resolution professional.
There are many things that you can put off or delay, but taxes are not one of them. Every American must file taxes each year and pay back any taxes owed (if applicable).
When you forget to file or pay your taxes, there is a mistake on the return, the IRS wants to change your taxes, or the agency still claims you owe money, it refers to all these problems as back taxes, or tax debt.
Tax debt increases over time because unpaid taxes incur penalties. Furthermore, interest is charged on installment agreement plans and other debt relief options. Every month, the IRS adds penalties and interest to your debt, which makes paying back what’s owed even more difficult.
Thankfully, there are tax debt relief options that can help you pay back taxes and reduce the worry and stress about owing the IRS money. Just remember that you should always file taxes and take care of back taxes as soon as possible to avoid collecting more debt. If you avoid the problem, it will only continue to get worse.
Avoiding filing or paying taxes may result in wage garnishments, the IRS freezing your bank accounts, tax liens and levies, and losing assets like your business, home, or car. It also damages your credit score—making it much harder to qualify for new loans in the future.
Tax debt is a nasty problem that does not go away until you confront it. Fortunately, there are many tax solutions, including an Offer in Compromise, which—if accepted by the IRS—could forgive all or a portion of your tax debt.
However, none of the tax debt relief options are available until you decide to pursue them. This is why speaking with a tax professional is vital to getting out of debt as soon as possible. With our help, you can avoid owing the IRS even more money or losing personal assets.
There are three surefire ways to resolve tax debt:
1. File your taxes on time. Even if you are afraid of how you will be able to pay back the debt, the worst thing you can do is avoid filing altogether. The IRS is more likely to work with you if you file on time, as opposed to neglecting to file. Those that fail to file a return on time face a monthly penalty of 5 percent on unpaid taxes, in addition to up to 25 percent interest.
2. Consider your tax debt relief options. Did you file on time but find you can’t pay back all of your taxes within 120 days? No problem, the IRS offers several different ways to resolve the debt. For example, you may decide to start a monthly payment plan with the IRS (known as an installment agreement) or request an Offer in Compromise.
3. Contact a tax professional for help. Tax debt is a tricky matter to navigate on your own. Schedule a personal consultation with the professionals at Levy & Associates to go over your tax debt and discover all the ways you can get assistance paying it back to the government.
If you find yourself burdened by tax debt, know that you don’t have to face this issue alone. There are ways to settle your debt in a practical way that will not cause more stress or worry. Levy & Associates has decades of experience serving clients in tax resolution. We are prepared and ready to help you get out of debt with the IRS.
Contact us today for more information at 800-TAX-LEVY, or reach out online to schedule your free consultation.
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.