Getting Rid of your Back Taxes through Tax Relief
Many business owners may have forgotten about paying taxes when they first started, and others just received inquiries from the IRS. There are situations when people get behind when it comes to paying their dues because of the returns' complicated nature.
If you owe plenty in back taxes, you may want to know that relief is available for you. You can also get guidance even if you haven't filed for many years. Some of the things you can do to know about TaxDesk gives relief and get in touch with the experts who can help you out. With this said, here's a guide about what you can do.
- Payment Plans from the IRS
You may need more time when it comes to paying everything, including your IRS bills. If this is the case, what you can do is to avail payment plans. The installment plans that may be available to you are the following:
Long-Term Payment Plans
This consists of 120 days or more, and you can process everything through automatic withdrawals. Know that there may be fees, including about $31 for online applications and $107 if you apply in-person, mail, or phone. These fees can always be waived for low-income people.
There are fees like $149 for online application and $225 through the mail, phone, or in-person if you have chosen other methods. The prices can be reduced to as low as $43 when it comes to low-income applications and can even be reimbursed in particular situations.
In long-term payment plans, the amount you can owe can be a maximum of $50,000, including interest, penalties, and taxes. You can read more guide about the payment plans when you click here.
Short-Term Payment Plan
Short-term means that you can settle the balance in about 18 days or less. It's free to apply by mail, in-person, online, or phone. You can settle the amount through automatic withdrawals on your savings account, money order, checks, or credit cards. The maximum amount is $100,000 inclusive of interest, penalties, and taxes.
Other things to know about relief available to you are the following:
- Payment plans don't save you from additional interests, late fees, and penalties. These amounts will accrue until you turn your entire balance into $0.
- A debt of more than $25,000 would mean that automatic withdrawals should be arranged at specific times with your bank.
- Processing fees may apply for payments through credit or debit card. The processing fees should be used, which amounts to $4 for every due date.
- Some people are classified as low-income individuals when they qualify as below poverty at a federal level.
You may find that there are offers in compromises if the IRS classifies you as someone who can't pay taxes. This can be an option if a payment results in a significant loss or financial hardship for the entire family. Read more about offer in compromise here: https://en.wikipedia.org/wiki/Offer_in_compromise.
It can be harder to enter an offer in compromise with the IRS, and the departments don't usually accept some of the requests. Exploring other options may be a better way before resulting in this. Know that the compromise involves an agreement where you settle for the lesser tax amount you've owed initially. You can ask an agent if you fall into the following category as the IRS will look at your overall expenses, income, assets, and your ability to pay.
Things to Know about the Application
You need to submit the suitable materials and follow the instructions to make an offer in compromise. Fill up form 656-B, and other things to know include:
- A $205 fee may be involved, and taxpayers with low income may be granted a waiver
- There's a need to make initial payments, and they are non-refundable.
- You need to be current with the returns
- The IRS will keep tax liens until the offer is accepted and you've made your end of the bargain
- If you haven't qualified, there's always an option to file for bankruptcy
- Hire the best tax professionals in the area for further processing of the paperwork, but this may not be needed
- Once there's the filing of this specific form and application, any activities and date for collection can be suspended.