Tax Debt Help - The Different Tax Resolution Solutions
When looking for tax debt help you have to know your options.
Some taxpayers believe that sending a payment in full is the only way to get out of debt - this is far from true.
In fact, this may be something that you cannot even afford.
Once you know the many ways to pay your tax debt it becomes much clearer what will work for you and what you should stay away from.
Each taxpayers situation is different and decisions of which method to use should be based on tax problem and unique financial situation.
Some of the different solutions include: 1.
Paying in full.
This is when you send payment in full for your tax debt.
When you do this your debt is going to be wiped out in no time at all.
While it may mean a lot of money out of your pocket, this is a quick and efficient way to get rid of debt.
If you cannot afford the entire lump sum payment or it would hurt your ability to pay other bills then you should use a different method to pay your taxes.
2.
Offer in compromise.
This allows you to settle your tax debt for less money than you owe.
Approximately 10 to 15 percent of offers are accepted by the IRS, so you should not put all of your eggs in this basket.
This is also known as a tax settlement.
This type of offer is mainly used when the taxpayer has a very bad financial standing and there is a high likelihood that the taxes would never be collected from the taxpayer or it would be unfair to hold the taxpayer liable for the taxes owed.
3.
Installment agreement.
This is a payment plan in which you send the same amount of money to the IRS, monthly, until your debt is paid off in its entirety.
This is a good plan for people who do not have the money to pay upfront and are not eligible for an offer in compromise.
There are many payment plans available and it is best to use a tax professional to help you setup an affordable payment plan with the IRS.
4.
Penalty abatement.
The IRS may have hit your account with large penalties because of your debt.
With the penalty abatement program you can get these removed, and in turn find it easier to pay your debt.
All that is required to abate your penalties is for you to be able to prove you have a legitimate reason for not filing or paying your taxes.
Sometimes penalties be up to 50% of the total taxes owed and this can lift a huge burden from the taxpayer.
5.
Uncollectible status.
If you can prove to the IRS that you are not able to pay your debt, which is not always easy to do, they will stop pursuing the collections process.
Which one of these solutions is best for your tax debt? If you want to find the right tax debt help, you need to make sure that you know the pros and cons of the five methods listed above.
Some taxpayers believe that sending a payment in full is the only way to get out of debt - this is far from true.
In fact, this may be something that you cannot even afford.
Once you know the many ways to pay your tax debt it becomes much clearer what will work for you and what you should stay away from.
Each taxpayers situation is different and decisions of which method to use should be based on tax problem and unique financial situation.
Some of the different solutions include: 1.
Paying in full.
This is when you send payment in full for your tax debt.
When you do this your debt is going to be wiped out in no time at all.
While it may mean a lot of money out of your pocket, this is a quick and efficient way to get rid of debt.
If you cannot afford the entire lump sum payment or it would hurt your ability to pay other bills then you should use a different method to pay your taxes.
2.
Offer in compromise.
This allows you to settle your tax debt for less money than you owe.
Approximately 10 to 15 percent of offers are accepted by the IRS, so you should not put all of your eggs in this basket.
This is also known as a tax settlement.
This type of offer is mainly used when the taxpayer has a very bad financial standing and there is a high likelihood that the taxes would never be collected from the taxpayer or it would be unfair to hold the taxpayer liable for the taxes owed.
3.
Installment agreement.
This is a payment plan in which you send the same amount of money to the IRS, monthly, until your debt is paid off in its entirety.
This is a good plan for people who do not have the money to pay upfront and are not eligible for an offer in compromise.
There are many payment plans available and it is best to use a tax professional to help you setup an affordable payment plan with the IRS.
4.
Penalty abatement.
The IRS may have hit your account with large penalties because of your debt.
With the penalty abatement program you can get these removed, and in turn find it easier to pay your debt.
All that is required to abate your penalties is for you to be able to prove you have a legitimate reason for not filing or paying your taxes.
Sometimes penalties be up to 50% of the total taxes owed and this can lift a huge burden from the taxpayer.
5.
Uncollectible status.
If you can prove to the IRS that you are not able to pay your debt, which is not always easy to do, they will stop pursuing the collections process.
Which one of these solutions is best for your tax debt? If you want to find the right tax debt help, you need to make sure that you know the pros and cons of the five methods listed above.
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