What do you do if you haven’t paid your taxes in the past, but you’re now being audited? Thankfully, there are options available to help you avoid this situation. If you owe money to the I.R.S. because of back taxes, interest, or penalties, you can receive tax relief to save money and prevent further financial issues. This article will outline what tax relief is, how it works, who can accept it, and how to receive it.
What is back tax relief?
If you’re not making enough money to pay your tax liability, you may qualify for relief—but there are a few different types of relief better suited to certain situations. With back tax relief, you agree to pay your income taxes in installments over an extended period. Depending on your particular situation, you may be able to reach an agreement with the I.R.S. without hiring an attorney. You might even be able to get back tax relief before being contacted by a collection agency or facing liens or garnishments.
Who needs back tax relief?
You may need back tax relief if you have unpaid taxes from previous years. If that’s true for you, you should talk with a tax professional before your filing deadline. By learning more about back tax relief, you can ensure you understand your situation and what options are available to help bring your outstanding taxes current.
The two kinds of back tax relief
There are two basic kinds of back tax relief offered by the I.R.S. With an Offer in Compromise, you may be able to settle your case for less than you owe without paying any penalties or interest (depending on your financial situation). If you qualify for a payment plan, you can spread your tax payments over time instead of paying everything immediately. No matter which forms of back tax relief you choose, it’s important to remember that neither eliminates what you owe nor puts off collecting on those taxes indefinitely. These programs are meant to help taxpayers who need a bit more time to get their affairs in order so they can pay their taxes, but eventually, all taxpayers must pay. As far as back tax relief goes, there’s no getting around that truth.
The two ways you can get it
There are two ways to get back tax relief if you owe taxes. The first is by paying off your debt with your current income. In other words, if you bring home $5,000 per month, pay off $500 monthly in back taxes over a set period. The second way is through an Offer in Compromise (O.I.C.). An OIC allows you to settle your debt for less than what you owe. An OIC works best when your financial situation has changed since filing or when there’s been a change in assets or liabilities that would affect how much money they’d collect from you if they filed suit against you.
Must see our related post regarding Taxation: HOW TO CALCULATE A TAX REBATE- STEP BY STEP GUIDE
Working with a qualified professional
The IRS can be a confusing beast. If you’ve found yourself over your head with back taxes, seek help from a qualified tax relief professional to help manage your situation. You can get out of debt faster by using programs like Offer in Compromise, installment agreements, or payment plans. If you find yourself owing more than $50,000 to Uncle Sam, it’s best to reach out to a representative—and do so quickly! The longer you wait before moving, the bigger your bill is likely to grow. Sooner is better when it comes to filing for back tax relief.