Getting Out of Tax Debt
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The problem that Billy and many others face can be easily managed using the following steps.
- Decide to handle this yourself or hire a tax professional.
- Double check your original tax returns. If you overlooked some deductions, it will be worthwhile to amend your tax return so you can lower the amount you owe.
- Choose the tax debt plan that best suits your current financial situation.
Do It Yourself
You can resolve your tax debts on your own if owe the IRS less than $10,000. Take a look at the 5 Ways to Get out of Tax Debt and choose an option that's best for your current financial situation.
If you owe the IRS between $10,000-$25,000, you should consider hiring a tax professional.
In particular, you will need to make sure your original tax returns are accurate, and that you will be able to afford the payment plan you set up.
If you owe the IRS over $25,000, you should definitely be working one-on-one with an experienced and qualified tax professional.
Finding a Tax Professional
CPAs and attorneys are limited to practicing in those states where they are licensed. Enrolled Agents can practice in any state. More tips on finding a tax professional .
Keep your costs under control. Tax professionals will charge you either an hourly rate for services rendered, or will quote you a flat
fee for all services. You want your tax pro to focus on strategies and negotiation with the IRS, and less on routine data entry and paperwork. Ask your tax pro what paperwork and IRS forms you can fill out yourself, to minimize the your overall fee.
Filing late tax returns and amended returns
If you've already filed taxes, your tax professional should quickly review those returns to determine if they are accurate and if you were entitled to deductions you overlooked. Amending a return requires a substantial amount of paperwork and reprocessing. Amended returns must be thoroughly accurate with lots of supporting documentation, or else you risk an IRS audit. Generally speaking, you'll want your tax professional to retrieve a complete set of documentation from the IRS and compare that information to the tax documents you already have. After a thorough review of your tax situation, the tax professional will advise you whether it makes sense to file an amendment. More tips on amending your tax returns .
Tax Debt StrategiesThere's five and only five strategies for getting out of debt.
- Installment agreement . a monthly payment plan for paying off the IRS.