Tax season can be a stressful time, especially if you find yourself facing a hefty tax bill that you can’t pay in full. The good news is that the IRS offers solutions to help taxpayers manage their tax debt, including installment agreements and short-term extensions. In this article, we will explore these IRS payment plans and how they can provide financial relief to individuals and businesses struggling with their tax obligations.
Understanding the Challenge
Life is unpredictable, and there may be times when unexpected financial burdens prevent you from paying your taxes in full by the due date. Whether it’s a sudden medical expense, a job loss, or any other unforeseen circumstance, the IRS understands that not everyone can meet their tax obligations on time.
IRS Payment Plans Explained
1. **Installment Agreements:**
An IRS installment agreement is a structured payment plan that allows you to pay your tax debt over time. It’s an excellent option for those who can’t pay their full tax bill upfront. Here’s how it works:
– **Application:** To get started, you’ll need to apply for an installment agreement. This can typically be done online, by mail, or in some cases, over the phone.
– **Payment Amount:** The IRS will work with you to determine a monthly payment amount based on your financial situation. It’s crucial to be honest and accurate when providing your financial information.
– **Fees:** Keep in mind that there may be setup fees associated with installment agreements. However, these fees are generally lower for low-income taxpayers.
2. **Short-Term Extensions:**
If you need a bit more time to pay your tax bill but believe you can do so within 120 days, you can request a short-term extension. Here’s what you should know:
– **No Setup Fees:** Unlike installment agreements, there are no setup fees for short-term extensions.
– **Penalties and Interest:** You will still be subject to penalties and interest on the unpaid balance during the extension period. However, the penalties are typically lower than those associated with installment agreements.
Benefits of IRS Payment Plans
Now that you understand the basics of IRS payment plans, let’s explore why they can be a lifeline for individuals and businesses facing tax debt:
1. **Financial Relief:**
IRS payment plans provide immediate financial relief by allowing you to spread your tax payments over an extended period. This can prevent you from draining your savings or going into debt to cover your tax bill.
2. **Avoiding Collection Actions:**
By entering into an IRS payment plan, you can avoid more severe collection actions such as wage garnishment, bank levies, or asset seizures. This protects your financial stability and peace of mind.
3. **Customized Plans:**
The IRS works with you to create a payment plan that suits your financial situation. Your monthly payments are tailored to your ability to pay, ensuring that you can meet your other essential financial obligations.
4. **Improved Credit Score:**
While your tax debt remains unpaid, it can negatively impact your credit score. Setting up an IRS payment plan and making consistent payments can help you rebuild your credit over time.
5. **Reduced Penalties:**
Although you’ll still incur interest on the unpaid balance, the penalties associated with IRS payment plans are generally lower than those imposed for failing to pay taxes on time without an agreement.
How to Apply for IRS Payment Plans
Applying for an IRS payment plan is a straightforward process:
1. **Gather Necessary Information:**
Before applying, gather your financial information, including details about your income, expenses, and the amount you owe. This will help the IRS assess your ability to pay.
2. **Choose the Right Plan:**
Decide whether you want to apply for an installment agreement or a short-term extension based on your financial circumstances and how quickly you can pay your tax debt.
3. **Apply Online or by Mail:**
You can apply for an installment agreement or a short-term extension online through the IRS website. Alternatively, you can submit Form 9465, Installment Agreement Request, by mail.
4. **Await Approval:**
Once you’ve applied, the IRS will review your request and notify you of their decision. If approved, they will provide details on the terms of your payment plan.
Conclusion
Dealing with tax debt can be overwhelming, but the IRS payment plans discussed in this article can offer a lifeline during challenging financial times. These options provide a structured and manageable way to address your tax obligations without resorting to drastic measures. Whether you opt for an installment agreement or a short-term extension, taking proactive steps to address your tax debt can lead to financial stability and peace of mind. Remember, when in doubt, seek guidance from tax professionals or IRS representatives to ensure you make the best choice for your unique situation.
Tax season can be a time of great anticipation for millions of Americans with dreams of a nice, big, refund check coming soon. Yet this year, many Americans may find themselves surprised and coming up short on their refunds.
Many taxpayers have been shocked to find that this year, instead of a big tax refund check arriving in the mail, they are being saddled with an unexpected bill from Uncle Sam. The combination of recent tax law changes and updated employer withholding tables has left individuals scrambling to figure out how to pay for their new IRS obligations due at filing time.
If you’re worried about a looming tax bill, never fear: there are measures you can take to ensure that your taxes don’t unexpectedly balloon. From budgeting tips to what do when the worst happens, these strategies will have your wallet breathing easy throughout the year!
Ignoring an IRS debt could ultimately result in serious consequences. It is in your best interest to be aware of any outstanding amount as soon as possible, providing time for tax planning and sourcing the necessary funds.
Don’t let late payments rack up and cause costly penalties and interest. Be proactive about filing your taxes so you’ll have a good idea of what will be owed, if anything, that is needed to be paid on time.
With the recent changes in tax law, your paychecks may have grown more generous – but don’t get too excited! They could mean less of a refund or an unexpected bill when you file. Make sure to stay informed and plan ahead so unpleasant surprises won’t come back to haunt you this filing season.
To prepare for tax season, it’s important to monitor your paychecks and ensure that the right amount is withheld. If you see a decrease in federal taxes being taken out of each paycheck, adjust this with your employer immediately – even though it may mean taking home less every month. Doing so can help protect you from federal and state tax debts and penalties later!
With just your final paycheck from last year and a few additional details, you can gain insight into what kind of tax refund or balance due to expect come filing season. It pays to take the time for preparation now so there are no unpleasant surprises later! However, please note that you should never use your 2022 final paycheck to prepare your return. You’ll need the actual W-2 from your employer in order to file a complete and accurate return.
To be prepared for tax season, compile all necessary records of your income, credits and deductions to estimate what you owe. Leverage the power of a reliable tax preparation software or use an everyday calculator with those numbers in hand to better understand your financial situation.
Ignoring a tax bill isn’t an option; the IRS will always come knocking. Settling it quickly can save you from further financial trouble, so don’t delay. Your taxes may burden your wallet now, but they’ll take hefty chunks out of your future if left unresolved!
Dealing with the IRS can be a daunting experience for many taxpayers. Even getting the IRS on the phone these days is nearly impossible. Without proper guidance, and expert help, attempting to negotiate your own tax problem is like going to court without a lawyer – not a wise move!
Struggling with tax burdens from the IRS or State? Our experienced team knows the IRS’s “ins and outs”, knows how to navigate the IRS maze and is here to assist you in finding a resolution that works best for your unique situation. Take advantage of our knowledge and expertise by booking an appointment with us today – take control of your taxes, and your life, before they become unmanageable! https://calendly.com/premierbusinessstrategist/freeconsult
The tax-code-defined vacation home rules come into play when you have both rental and personal use of a home. Thus, you can have tax-code-defined vacation homes in the city, in the suburbs, and in recreation areas. If you have no combined rental and personal use of the home, the rules are easy. The property is one of the following:
But when you have both rental and personal use of the home, your tax life gets more complicated because you have entered the tax code’s vacation home section. In this situation, the property in a more complicated way is one of the following:
If it’s a principal residence, then the $250,000/$500,000 home sale exclusion is available when you sell. If it’s simply a second home, you can’t use the exclusion and you pay taxes at capital gains rates—and you may suffer the NIIT as well. If it’s a rental, you face the capital gains rules, NIIT, unrecaptured Section 1250 gain taxes, and release of some (if grouped) or all (if not grouped) passive activity suspended losses. When you have rental use after 2008 and then convert the rental to your principal residence, you must use a rental/residence fraction to determine how you will be taxed.
As you can see, the rules in this area can get complicated. If you would like to discuss the rules, please don’t hesitate to call me on my direct line at (757) 410-8030.
A growing number of people are voting with their skills and leaving the world of traditional employment behind. These are the folks who are opening their own small businesses, the people who are embracing freelancing, and the men and women who are using gig work to make a good income.
As this trend continues, many of those newly self-employed individuals are finding themselves at a loss, especially when tax season rolls around. One of the worst feelings is working so hard throughout the year, only to get blindsided by a huge tax bill you weren’t ready for.
While traditional employees can rely on the companies they work for to withhold taxes and report their earnings to the IRS, the self-employed are expected to complete these actions on their own.
To make matters worse, the self-employed often pay higher taxes than their traditionally employed counterparts, leaving them short of the cash they need when April 15 rolls around.
If you get blindsided by a tax bill of more than $10k to the IRS or state but can’t pay in full, contact our firm today. We help people find tax relief https://calendly.com/premiersmlbus/consult
If you are newly self-employed and want to avoid this fate, here are some timely tips for making your self-employment activities less taxing.
Set up a business bank account. It is important for the self-employed to keep their personal and business activities separate, and the best way to do that is with a business bank account. A basic business checking or savings account will make it easier to track your income and expenses, making tax season easier and less costly.
Open a business credit card account. Having a separate credit card in the name of your business will give you an easy way to pay expenses applicable to your self-employment income. This can make expense tracking, reporting, and tax filing a lot easier.
Avoid underpayment penalties by making quarterly payments. When you work a traditional job your employer is responsible for accurate tax withholding, but the self-employed are not so lucky. As a self-employed individual you are responsible for paying your taxes on a timely basis, and failing to do so could trigger costly penalties and interest. Making quarterly payments to the IRS and state is the best way to avoid those expensive repercussions.
Track expenses throughout the year, not just at tax time. If you wait until April to add up your expenses, you could miss deductions that would have otherwise reduced the amount you owe. Tracking expenses when they are incurred will help you avoid this underreporting, so you get credit for every penny.
Research retirement plans for the self employed. The self employed have access to some exceptionally generous retirement plans, including solo 401(k) plans and SEP-IRAs. These accounts can sharply reduce the amount of taxes you pay, so do your homework and choose the one that is right for you.
Have your taxes reviewed by a qualified tax professional. When your taxes are simple, doing them yourself is pretty easy. Tax software makes tax filing simple, but that simplicity could be costly when you are self employed. Even if you are confident in your abilities, having your work reviewed by a CPA or enrolled agent could save you a lot of money.
There is a lot to love about self employment, from the chance to work at home to the opportunity to live life on your own terms. Even so, being self employed can be taxing, quite literally, and it is important to plan carefully from the start. The tips listed above can help you reduce your taxes, so you can keep more of the money you worked hard for.
OWE BACK TAXES?
Our firm specializes in tax resolution and helping people who owe the IRS or state $10,000 or more. We’ve seen taxpayers get blindsided every year by a huge tax bill and often falling behind on their taxes for years on end. If that’s you, we can help. Contact our firm today to discuss your tax debt settlement options https://calendly.com/premiersmlbus/consult
Given how high the stakes are, it is surprising how little thought many people give to their taxes. All too often, individuals simply walk into a neighborhood storefront, hand over their most personal information, and trust the person on the other side of the desk to do the right thing and prepare their taxes properly.
In many cases, that trust is well placed, and the individual preparing the taxes is indeed the honest and trustworthy professional they claim to be. In other cases, however, the trust is misplaced, and the tax preparer will end up making mistakes that could cost the individual a great deal. If an audit is triggered by deliberate misrepresentation or unintentional mistake, you will still be on the hook for any additional taxes, interest, and penalties.
If you’re in tax trouble because you trusted the wrong tax preparer, then you will need a qualified tax resolution firm to help you resolve your tax problem. However, you don’t want to repeat the same mistake twice! So it is important to do your homework and know what to look for in a tax resolution firm. Here are 4 quick tips to help you find a qualified tax resolution firm.
#1 Read Their Reviews Online
By reading online reviews you can quickly see if the tax resolution firm is reputable and stands by its clients. A lot of the big national firms will have terrible reviews but they market themselves heavily, so consumers don’t think twice about their reputation. If you owe back taxes, waiting can cost you a lot of money and if the tax resolution firm disappears on you or doesn’t return your call, that wasted time could cost you dearly. This can easily be snuffed out by seeing if they have good online reviews about their services.
#2 Make Sure the Tax Resolution Firm Has Experience and A Proven Track Record
Negotiating with the IRS to settle your tax debt is a specialized skill that not all tax attorneys or tax professionals have. It’s important to ask about their recent case settlements and success stories. A true tax resolution professional will have proof they’ve done this before and successfully helped resolve back tax problems.
#3 What Does Their Communication Look Like Once You Sign-On?
A professional and experienced firm will have systems in place to make sure you’re updated regularly on your tax resolution case. The IRS moves slow and there will likely be big gaps in time in between updates from the IRS. That doesn’t mean the tax relief firm should also have communication gaps. Ask how long they think it’ll take to resolve your tax problem, and how you’ll be updated even if they don’t have any news from the IRS.
#4 Avoid Big National Firms With Salespeople Who Promise The Moon But Don’t Deliver
You’ve heard their ads on the radio or TV. If you call a big national firm you’ll likely get a salesperson who knows very little about taxes or how to settle your tax debt. Not every taxpayer qualifies for all the IRS tax debt settlement programs. However, these salespeople will promise you the moon but will fail to deliver because they didn’t take the time to understand your specific situation and they’re not licensed tax resolution professionals. Make sure to ask who will be responsible for your case and try to speak with them directly before signing up. A true tax resolution expert will be happy to speak with you to make sure they can understand your case and offer you the right solution.
Need Tax Relief?
If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem. https://calendly.com/premiersmlbus/consult