Tax Debt Help

Many Americans are overwhelmed by the amount of money that they owe to the IRS. Fortunately, there are several methods that will help reduce the amount of tax debt you pay and give you the debt-free life that you’ve been waiting for. If you’re the kind of person who likes to tackle challenges on your own, then then there are a number of options available to you. Or, if you’d rather hire a tax professional to ensure that you’re doing everything correctly, that is an option too.

If you owe taxes of less than $10,000, then it’s often in your best interests to pursue the do-it-yourself option. Meanwhile, for any greater amount, it’s a good idea to hire a tax professional. And, if you owe an even larger amount of money, like more than $30,000, then working with a tax professional is absolutely vital, as it could be the difference between a lifetime of debt and financial freedom.

What are some of the DIY methods to get out of tax debt with the IRS? Unfortunately, your options are fairly limited, especially if you’ve already filed your tax returns. If you haven’t already done so, then you can file them as soon as possible and claim all the deductions to which you are entitled. Meanwhile, everybody else will have to commit to some sort of repayment agreement with the IRS. This includes five different options:

Instalment agreement: A defined monthly payment plan to the IRS.

Partial payment instalment agreement: A plan that allows you to pay off your debt at a reduced dollar amount over a longer term.

Offer in compromise: In exchange for making a lump sum or a short term payment plan, the IRS allows you to pay off your debt for less than what you actually owe.

Not currently collectible: If you’re not in a position to pay back your debts, then the IRS may give your debt this status. This withholds payment of your debts for a short period of time – usually a year. If this status is maintained for 10 consecutive years, then your debt to the IRS will expire.

Filing bankruptcy: Of course, there is always one sure-fire way to escape from debt, and that is to declare bankruptcy. While this will destroy your credit rating, it can be the only solution for many people. However, be sure to understand the requirements of Chapter 7 and Chapter 13 bankruptcy laws before you even consider this option.

Hiring a tax professional

If you would rather save yourself the hassle of time and research, then you can always pay a professional to do the hard work for you. By hiring a tax professional to examine your debt to the IRS, you can relax knowing that your financial situation is in knowledgeable hands.

Obviously, this comes at a slightly higher cost than if you were to do it yourself. Tax debt professionals often charge by the hour, and the bill you receive by the end of your negotiations could wipe out any gains you made by consulting the tax professional in the first place. For that reason, this option is best used by people who have more than $10,000 in tax debt.