Tax debt is a huge burden that many people are dealing with right now. Whether you have back taxes to pay or money owed from previous years, the best thing you can do is start taking steps today to get back on track with your finances. The rest of this article will be dedicated to outlining how paying back taxes can become much simpler for you and your family.
Contact the IRS and Setup an Installment Agreement
A common mistake that many people make is trying to avoid the IRS.
However, you need to know that one of their options is actually setting up a payment plan with them so they can come back later and take back what you owe from your tax returns at a future date, according to https://www.taxfyle.com/tax-preparation-outsourcing.
Make a Request to Pay Your Full Balance on a Short-Term Basis
Another option that you have with back taxes is to pay back the full amount of money owed.
This does not mean you will be off the hook once and for all, but it will allow you to clear your tax debt sooner than if you were paying back what was owed on an instalment plan.
Keep in mind that this only works well if someone has enough extra cash available right now.
Apply for a Hardship Extension if Possible to Pay Your Back Taxes
Another option is to apply for a hardship extension.
You will need to make sure you have specific and compelling reasons as to why you cannot pay back what was owed, and the IRS will either approve or deny your request based on how reasonable it sounds to them.
Request That Your Tax Filing Status be Reclassified if You Owe Money from an Unpaid Balance
Suppose back taxes are not yours but instead belong to someone who has passed away. In that case, another thing you can do is ask for your tax filing status to be reclassified so any future tax returns would go towards paying off their debt first before being paid out in full by yourself after everything else has been covered.
It is essential that back taxes are paid off as soon as possible so you can avoid the risk of having more money and assets taken away by the IRS.
Paying back taxes may be a challenge, but it does not have to become an overwhelming burden on your family’s budget.
The sooner you take steps towards getting back on track with filing tax returns, making sure back taxes are being covered in full every year and working out payment plans for what was owed from previous years instead of ignoring them.
Take Out a Personal Loan to Pay Down Back Taxes
If back taxes are something you need to pay off right now, another option that people turn to is taking out a personal loan.
You will not want to use this as your only way of paying back money owed from tax returns because it can end up costing much more than if you were using other options like an instalment plan or applying for hardship extensions.
However, the good news is that oftentimes these loans do not have high-interest rates attached, so they can help spur on getting back on track with everything else faster.
Borrow Funds from Your 401k, IRA, or Other Retirement Account
Another option that people are turning to in order to pay back money owed is borrowing funds from their 401k, IRA, or another retirement account. Can 401k’s be garnished? Find it out at Daily Prosper.
This works out well for many people because it allows them the ability to avoid having more assets taken away by the IRS while also avoiding higher interest rates attached to personal loans and lines of credit.
So long as you have enough available cash on hand after taking this step towards getting back on track with your taxes, then paying back what was owed should be much easier than before.
Contact a Nonprofit Tax Assistance Organization if You Cannot Afford Any of These Options
If back taxes are something you need to take care of but cannot afford any other options, one thing people can do is contact a non-profit tax assistance organization.
These groups will often work out payment plans where they pay back what was owed and then help their clients find ways to get back on track with filing tax returns before anything else happens.
A nonprofit group like this usually works best for individuals with limited funds available or no savings at all because it helps lower the risk of having assets taken away by the IRS.
Use a Credit or Debit Card to Pay Back Taxes
Another option that some people are turning to is using a credit or debit card.
While this may not be the best course of action because it can lead to additional fees being tacked on, it does help lower the risk of assets being taken away by the IRS if back taxes are something you need to take care of right now and cannot pay them off in full.
There might also be an added benefit where your back tax debt gets forgiven after paying back what was owed over time with monthly payments like this.
The main thing about getting back on track with filing back tax returns and having money owed from previous tax years covered is making sure they get paid off as soon as possible, so you do not end up accruing more back tax debt.
Hire a CPA to Help Out with Tax Debt
If back taxes are something you need to take care of, hiring a CPA is another option that people turn to.
Whether back taxes are being paid off because of filing late or trying to get rid of them through instalment plans instead, working with a professional who understands everything about what the IRS expects could be just what you need right now if back tax debt has been dragging down your finances.
Ready to Start Paying Your Back Taxes?
As you can see, there are several ways you can pay your back taxes. To learn more about this subject, continue reading our blog for more helpful articles.
