Tax returns are filed, and now it is time for the hard part—paying your tax debt. Whether this is the first year you owe or you have had debt accumulating over years, this is an issue that must be addressed soon. Fortunately, if you avoid procrastination, there are options for paying your taxes that may be less burdensome for your budget. Here are five approaches to tax service in Jamestown, ND that help you to become free of tax debt:
- Offer in compromise: If you expect a work bonus, inheritance payout or lawsuit settlement that leaves you with a large amount of money, an offer in compromise may be your best option. This approach allows you to settle outstanding tax debt for an amount much less than what you owe. Collection activity stops as soon as you start negotiating with the IRS. The only catch is that, if the IRS accepts your offer, you must pay the entire amount immediately. Do not pursue this course unless you have the money in your possession now, or will soon. If you fail to honor an offer in compromise or use it to buy yourself time, that reduces your options later.
- Penalty abatement: Unemployment, medical expenses, disability and other developments that substantially limit your income may allow you to benefit from penalty abatement. This is when the IRS agrees to remove penalties and interest from the amount owed so you are more likely to be able to pay it. As penalty abatement can decrease your debt amount by 50 percent or more, this often makes all the difference when paying off taxes.
- Installment agreement: If you bring in a regular income and can keep up with a monthly payment, you may be eligible for an installment agreement. Paying $1,200 immediately may not be within your capabilities, but payments of $120 to $150 each month until the debt is gone may work out for you. You can choose a payment that works with your income and does not put you in distress. Never promise a $500-a-month payment when you are uncertain if you can meet it. You always have the option of promising lower payments and paying more during better months.
- Negotiation: Some situations require advocacy. Seizure of property, levies and garnishment are possibilities when you owe the IRS. If a sudden disappearance of your bank account can compromise the care of a dependent or other expenses, you must take steps to protect it. Negotiating payment terms with the IRS can stop this course of action, or we can refer you to an attorney to place assets in trust.
- Bankruptcy: If payment terms are not realistic, you may need to file bankruptcy. Seeing a tax preparer before taking this step assures your records are organized and ready to present to the bankruptcy trustee. That helps your bankruptcy proceed in the most uneventful way possible.
If you need a reliable tax service in Jamestown, ND to file returns, reduce debt or handle your day-to-day bookkeeping, Craig S. Hanson, CPA is available. Call today to discuss tax payment options.