Getting out of a tax debt has no easy answer, but by following a few guidelines based on your current situation, you can find your best tax debt solution.
The first thing you must do is discover exactly how much money you owe the IRS. This is crucial and relates directly to whether you can solve your debt issues on your own, or need to a hire a professional to help you solve your income tax debt issues. The line here is drawn at $10,000. If you owe more than $10,000 than a tax professional is required to help you solve your debt. If you are under the debt can be solved without any outside help.
For now we will assume you have decided to hire a tax professional. When choosing a professional to hire, you must understand you have only three options: a tax attorney, CPA, or an enrolled agent. These are the only professionals who are legally allowed to go before the IRS to solve your tax problems. Now because you are already under significant debt, it is best to find a cheap professional. You also want to make sure that you can minimize costs for the hired professional once he is working for you. This includes doing as much work and research on your own as possible and pushing them to focus on tax debt negotiation with the IRS rather than doing alternate work that will increase your cost to them in the end.
After you have chosen a tax professional, it is time to find your best tax debt solution. In order to do this you must first file your tax returns, being sure to have your hired professional double check all returns to grant to maximum deductions. If your returns have already been filed, you may or may not want to consider amending them based on the number of deductions that you have available. You should follow your tax professional’s advice when it comes to tax returns. If you did not hire a tax professional you should file your returns as soon as possible, attempting to take advantage of all deductions you alone are capable of. The returns need to be filed as soon as possible to stop interest from piling up, and your debt from increasing.
After returns are filed you must choose a strategy you wish to take advantage of to pay off your debt. There are only a few available options in achieving tax debt solutions. The first option is the Not Currently Collectible program offered by the IRS. It is unlikely this will work for you, but involves the IRS postponing all payments required by you for a fixed amount of time. This is ideal for anyone who likes to put things off. Next you are able to offer compromise to the IRS through your professional. This method invokes paying a smaller amount of money than what is actually owed, but making larger payments over a short period of time. Those in a financial crisis may find problems fulfilling this style of solution. The next method is the most basic method. This is the Installment Agreement. This simply requires standard monthly payments until debt is gone. This should be chosen if methods that let you off easier are not available. After that is the Partial Payment Installment Agreement. This is a superior version of the previous program, as it is the same only with smaller payments each month. The final and worst way to rid yourself of debt is to declare bankruptcy. This method of tax debt redution is an extreme option and should always be considered a last resort.
So with the help of a professional to help file tax returns with larger deductions, and the ability to apply for the program you see best to rid yourself of debt, you should be pretty satisfied and on your way with a great tax debt solution leading you towards a debt free future.