One of the things that you should never miss paying off is your taxes. Tax debt is of quite a serious nature as this is the money that you owe to the government. If not paid, the government can even garnish your bank accounts. Thus, it is better to keep a watch on the money that you are required to pay to the Internal Revenue System or the IRS. However, if you face problems with your tax debts, you can consolidate debt and include your tax debts into it or else you can also negotiate with the IRS and talk to them about your financial problems.
Ways to pay off tax debt
There are mainly two ways in which you can pay off your tax debt and these are the settlement agreement and the installment agreement. The different installment agreements through which you can pay off your debts are:
- Partial payment installment agreement – Partial payment installment agreement is considered best tax debt solutions if your finances do not even allow you to make even minimum payments through either guaranteed or streamlined agreements. In installment agreement, you will get the option to make monthly payments as per your affordability. Other than this, the IRS will also be re-evaluating terms of the agreement every 2 years in order to check whether or not your affordability has increased.
- Guaranteed installment agreement – Guaranteed installment agreement is suitable for you only if the amount you owe to the IRS is less than $10,000. In addition, you are also required to fulfill some eligibility criteria. You will be required to agree that you will file and pay the taxes within time for the forthcoming tax years. The IRS however won’t be approving the installment agreement if you had made payments through another installment agreement in past 5 years.
- Streamlined installment agreement – In case of streamlined installment agreement, you will not be required to fill out a Form, 433-F which the Internal Revenue System requires so that they can analyze your financial condition and if you are in real financial crisis. If you want to avail of the streamlined installment agreement in order to pay off your IRS tax debt, the amount that you owe should be more than $25,000 and in addition to that you will also have to agree that you are going to pay off the due amount within 60 months.
The options that you have in case you opt for settlement agreement is the penalty reprieve offer, the compromise offer or else you can also seek professional help in order to settle your tax debts. Other than this, you can also opt for IRS tax bankruptcy option only if your situation is such that you will be required to file bankruptcy.
- Tax debt: Getting help with debt on IRS payments (2010tax.org)
- Tax debt: Ways in which you can pay off IRS debt (2011tax.org)