With tax season barely behind us, it is time to start asking yourself some questions as a taxpayer. What will you do with your tax return? Do you have enough money to pay what you owe? If you've found yourself burdened by tax debt and need some guidance, Raichelson Law, P.C. has some tips to help you better understand your options when you owe more in taxes than you can afford.
What Not to Do
Don't avoid the bill or the situation – the worst thing you can do in this moment is circumvent the IRS and jump to conclusions. Make sure the numbers are correct and review your completed tax return to ensure the information submitted is accurate. With all the numbers and fine print, it can be easy to get lost in the details and make a mistake. Forgetting to check that one box or answer a question could prevent you from getting more money back. You can also compare this year's return to the one prior if the number you owe is drastically different. Just because the IRS says you owe the government money, doesn't mean they are necessarily correct. They can make – and have made – mistakes too!
Some people end up paying less because they qualify for an offer in compromise (OIC). Though not all will qualify for an OIC, it is worth researching to see if you can lessen the amount you owe with this agreement. Some of the qualifications include ensuring all your tax returns are filed and estimating your tax payments for the current year. To begin and complete the OIC process, you'll need to fill out paperwork. Sometimes it can seem daunting to fill out more paperwork after completing your taxes, which is why working with a tax attorney may be the best route to take to ensure the process is done correctly. Tax attorneys are your tax advocates who guide you through the process and negotiate on your behalf.
Set Up a Payment Plan
If you owe $50,000 or less, you may be eligible to set up an installment agreement with the IRS to pay your tax bill. You can file Form 9465 for an Installment Agreement Request, if you decide this is the best option for yourself. The IRS provides instructions about this form along with more information on how the agreement works to help you get a better understanding of the installment request. You may also be eligible if you prove you are unable to pay what you owe right now or if you cannot pay off the amount within a certain time period.
Write a Letter
If you already cannot afford your tax bill and have to pay penalties or interest on top of it, then you may feel even more overwhelmed. There are options available to help you, including asking for an abatement of penalties. The IRS can lower, and completely abolish, penalties and interest if you write them a letter explaining your situation. Honesty and transparency are key when dealing with the IRS. Tell them if you made a mistake or had a family emergency. Give them the true reason why you cannot pay the steep price they are requesting.
There are no guarantees that your tax bill, penalties, or interest will be lowered, but you must be proactive if you want to attempt to lessen the amount you owe. Raichelson Law, P.C. offers over 20 years of experience in tax debt and tax controversy. Let us take the burden of debt off your shoulders. Contact us today for a free consultation to learn more about how our tax attorneys can help you.