Tax season can be a scary time…especially if you owe back taxes. On top of mortgage payments, credit card debt, and your regular daily cost of living, any unpaid taxes can be a heavy burden for you to carry. Add to this concern that back taxes can accumulate interest and carry financial liens. So what can you do to find a solution?
1. Stay Calm
Of course unpaid back taxes aren’t necessarily the worst thing in the world, but ignoring the issue isn’t going to help you resolve the problem any quicker. Sure, you won’t be the first (or last) person to owe back taxes, but it’s important enough to try and find a resolution so you can continue on your path to financial freedom. You’re best bet is to stay calm and address the issue.
2. Face the Facts
There’s no such thing as estimating in the tax world. Verification and fact finding is going to be your goal in order to really get the exact amount that you owe. You can call the IRS to find out the total amount, but you should also make sure you’re tracking that figure through your old tax returns (the IRS will run your tax returns even if you don’t but without many of the regular credits you might receive). If the amount provided to you sounds correct, make sure your fill out Form 9465, the Installment Agreement Request.
3. Can’t Pay It Off?
In order to avoid those hefty penalties and that pricey interest, the most sensible thing to do is to pay off the amount owed immediately. However, if paying back taxes is going to be an issue, get in contact with the Taxpayer Advocate Service. This independent organization within the IRS can provide free assistance to those struggling to find a solution to their tax problems. You should also use the irs.gov Online Payment Agreement Application to help set yourself up with a payment plan.
4. Negotiate the Repayment Schedule
Paying a burdensome monthly payment can add to your financial woes. So make sure you negotiate a repayment plan that fits your budget, but bare in mind that depending on the amount you owe, you’ll have between 3 – 6 years to pay it back. Also, interest and penalties will continue to accrue. Still, this can be a better option if the total back taxes due are impractical for you to pay fully at the moment.
5. Beware the Scams
With the internet being a source of information for many people, it can seem like an easy path to Google “tax help” and click on the first website that pops up. Be Very Careful about following this process. Too many “companies” online are running tax scams to trick you into providing them personal and financial information. The IRS keeps a running list on their website for tax scammers/consumer alerts so it’s best to look there before you start emailing your information to anyone. Which leads us to tip number 6.
6. Hire a Professional
Is the IRS bombarding you with to many questions? Can’t find enough answers? Consider acquiring professional help with CPA services like Gonzalez & Arrambide, Inc. and let us help: find you more time, fight for lower monthly payments, or even try an “Offer in Compromise” which can mean settling the debt for less than what is actually owed.
Our experienced CPA’s can provide you the expertise needed to help you gain control of your financial problems. Don’t let back taxes be the reason you can’t move forward in life. Let Gonzalez & Arrambide, Inc. be the support you need at the times you need it most. Give us a call at 956.447.9009.