Whether debt or tax, it is challenging to avoid both of them. Life may seem pretty miserable if you owe a big tax bill that you can’t pay. Despite the long-running economic expansions recorded over the last decade, millions of Americans struggle to pay off their debts. You don’t need to worry if you are struggling to pay off your debt. You can get Free Debt Advice in Washington to manage your debts. In this blog, there are some steps that you can take to reduce the impact of the tax debt you owe.
Following are the five tips that you can follow to lessen that burden:
Tip 1: Do Not Ignore the Problem
Even if you cannot pay the tax you owe, you can file your return on time; if you can’t pay for the return, then file for an extension. The penalty for late fees is 5% of the tax you owe each month or 25% of your balance. Also, they apply an underpayment penalty of 0.5% to 1% every month for the balance you owe, up to 25%. If you can’t file a return or pay for your obligation, then your tax will grow speedily.
Tip 2: Be Practical About Your Situation
The IRS forgives your tax rarely. Form 656 is an “offer in compromise” application, which is a form to settle your tax to less than you owe. These kinds of deals are for people who are experiencing a genuine financial crisis. If you have lost your job or your family has terrible health care expenses, and you have poor prospects to generate income in the future, then you are qualified for the settlement.
Tax forgiveness is intended for people facing financial issues and struggling with the tax burden. People need to be realistic; if you have assets and earn, you will not get any tax relief. Reach a debt counselor to learn about the Free Debt Relief Programs in Washington.
Tip 3: If You Have Less Than $10,000 of Balance, Then Handle It Yourself
It matters how much balance you owe; if you have less than $10,000, you can pay it and handle the matter yourself rather than hiring someone and paying them to help you deal with the IRS. Form number 9465, the IRS application for an installment plan the form can be filed online. This service will agree automatically to such a plan for a person who owes less than $10,000 tax. These plans allow you to repay the balance you owe with penalties and interest over 36 months.
Tip 4: If You Owe More Than $10,000 of Balance, then Hire an Attorney
If you have more than a $10,000 balance, then you need to consider hiring an attorney who may help you by negotiating with the IRS. There are different payment plans, and an experienced attorney will help you get better terms. They will help you avoid having a tax lien assessed against you, which can harm your credit.
It would help if you will be careful while hiring an attorney. Some attorneys are fake and do scams with people. If any attorney tells you that they can help you eliminate the interest and penalties assessed by the IRS or settle your tax debt on what you owe, they are lying to you and will charge you fees you can’t afford. Know about the Best Debt Settlement Arrangement in Washington and hire an attorney to get one.
Tip 5: Get Streamlined
The best scenario for a person who has significant debts to the government is to get a streamlined installment agreement. As per the Fresh Start program, which the IRS initiated in 2011, the person who owes $100,000 tax debt can qualify for this agreement. If you want to do so, you must file all the past tax returns, and you should not have entered an installment agreement in the last five years.