Understanding Your Tax Debt Situation
If you’re behind on paying your taxes to the Internal Revenue Service (IRS), it’s natural to feel overwhelmed and stressed. You might feel like there’s no way out, but IRS tax debt relief options are available if you know where to look. Before exploring the different relief options, it’s important to understand your current situation. The first step is to determine the total amount you owe to the IRS in taxes, interest, and penalties.
You can check your tax account balance online through the IRS website or by calling the IRS. Knowing how much you owe will help you determine which debt relief option is right for you and how to approach your IRS debt repayment plan. To enhance your learning experience, we suggest checking out resolve debt. You’ll discover more pertinent details about the discussed topic.
IRS Tax Debt Relief Options
There are different IRS tax debt relief options to address your tax debt situation. Here are the two latest IRS relief options:
1. Currently Not Collectible (CNC) Status
If you have a financial hardship and earning less than your monthly expenses, you may qualify for a Currently Not Collectible (CNC) status. It puts a hold on your collection account and the IRS will stop all collection action until your financial situation improves.
There are several requirements to qualify for CNC status, such as proving that paying your tax bill would prevent you from meeting your basic living expenses and that your income only covers your necessary living expenses. You must also have filed all your tax returns, and the IRS will monitor your financial situation each year to ensure your warrant for relief isn’t temporary. If the IRS deems that you are once again able to pay your taxes, they can remove the CNC status from your account and restart the collection action.
2. Installment Agreement
You can set up a payment plan with the IRS to make smaller, monthly payments instead of paying your total debt at once. This option is called an installment agreement, and it is designed for those who are not able to pay their entire tax debt and who owe less than $50,000.
An installment agreement gives you the freedom to pay your debt over a longer period, up to 72 months. Additionally, if you provide the IRS with your bank account information, you can easily schedule your monthly payments. There is a fee to set up an installment agreement and interest and penalties will continue to accrue on your unpaid balance, but the fee for low-income taxpayers is waived.
Conclusion
If you are struggling to pay your IRS tax debt, know that there are options available that may help you. The IRS offers tax debt relief options, including Currently Not Collectible status and installment agreements. If you’re unsure about which option is right for you, consult with a qualified tax professional who can provide guidance on how to approach your specific situation.
Remember that the key to resolving your tax debt is to act quickly and be proactive. The IRS has several tools available to collect taxes, including levies, liens, and wage garnishments. By being proactive about your tax debt, you can avoid these consequences and work towards a fresh financial start. We’re always looking to add value to your learning experience. For this reason, we suggest exploring this external site containing more details on the topic. alltran financial, discover and expand your knowledge!
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