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Self-guided strategy for resolving tax debt: Things to consider

Self-guided strategy for resolving tax debt: Things to consider 1

Self-guided strategy for resolving tax debt: Things to consider 2

Understanding Your Tax Debt

One of the first things that you should do when dealing with tax debt is to understand how much you owe. This can help you determine your payment plan options and whether or not you should consider hiring a tax professional. You can use the IRS website to access your account information and view your payment history. Additionally, you can request an installment agreement or an offer in compromise if you are unable to pay off your debt. Explore the subject matter further by visiting this specially curated external website. Check out this valuable content, uncover additional information and fresh perspectives on the topic discussed in the article.

Creating a Budget

Once you know how much you owe, it’s essential to review your budget and determine how much money you can put towards paying off your tax debt each month. This can help you create a payment plan and prioritize your tax debt over other debts. You should consider cutting back on non-essential expenses and finding ways to increase your income, like taking on a part-time job or selling items that you no longer need.

Setting up a Payment Plan

If you are unable to pay your tax debt in full, you can set up a payment plan with the IRS. This will allow you to make monthly payments towards your debt until it is paid off in full. When setting up a payment plan, you have the option to pay through automatic withdrawals, online payments, or mailing in a check. Keep in mind, setting up a payment plan will come with interest and penalties.

Offer in Compromise (OIC)

An offer in compromise (OIC) is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax debt for less than the full amount owed. If you are unable to pay off your tax debt in full, you can submit an OIC application and propose a payment amount that is less than what you owe. The IRS will review your application and determine if your proposed payment amount is reasonable. If accepted, you will pay that amount to the IRS, and the remaining debt will be forgiven.

Selling Assets

If you are unable to pay off your debt with a payment plan or OIC, you might consider selling some of your assets. This could include items that you no longer need or use, such as jewelry or a secondary vehicle. Selling assets can help you pay off your debt quickly, but it’s important to remember that it might not be enough to cover the entire amount. Additionally, selling assets could have long-term financial consequences, so it’s essential to weigh the pros and cons before making any decisions.

Hiring a Tax Professional

While there are self-guided strategies for resolving tax debt, you might consider hiring a tax professional to help you navigate the process. A tax professional could help you negotiate a payment plan or OIC, help you understand your options, and represent you in front of the IRS. However, keep in mind that hiring a tax professional will come with additional costs, and it’s essential to choose a reputable and experienced professional.

In conclusion, resolving tax debt can seem overwhelming, but there are self-guided strategies that you can use to help you get back on track. Understanding your tax debt, creating a budget, setting up a payment plan, submitting an OIC application, selling assets, and hiring a tax professional are all viable options. No matter which strategy you choose, it’s essential to communicate with the IRS and make every effort to pay off your debt. Learn more about the subject covered in this article by visiting the recommended external website. Inside, you’ll uncover supplementary information and an alternative perspective on the subject. Find more insights in this comprehensive source!

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