Tax Debt – Know Your Options & Qualifications

Tax Debt

Tax Debt Settlement Options and Qualifications

If you somehow find yourself in an unlikely position of owing more amount than you can pay to the Internal Revenue Service (IRS), then probably it is time to consider all the available options for your tax debt settlement and repayments.

If you are unable to disburse your tax debt settlement within the next 10 years or the specified collection stature, then the IRS is given the get-go to claim your properties and assets as the payments to your debts. For the purpose of avoiding this embarrassing situation, you must follow these options:

Agreement of Installment: You are able to repay your tax settlement in the set monthly payments. You are given an affordable amount to disburse each month until you settle your bills. Unfortunately, you will be wasting more money due to the fact that there are penalties and interest to consider. Though this is one of the most famous methods utilized by taxpayers, it takes a longer period of time to meet the payments.

Disbursing in Full: If you can somewhat disburse in full, then there is no better choice for you. If you don’t have the cash, then you can raise funds by asking for help from your friends or family. By paying in full, you are eradicating the probability of more charges and penalties resulting; a small unpaid amount could collect a large burden, thus, forming a harder tax debt settlement arrangement.

Credit Card: If your credit limit can handle your IRS tax settlement amount, or if you can live with your credit card’s interest, then you can make use of your credit card to disburse off your existing IRS tax debts. Unlike the IRS, credit cards cannot impose deductions on your wages, or to levy against your bank account.

Offer in Compromise (OIC): Among the four choices, this option is perhaps the most attractive one, especially if you don’t have the means to repay the accumulated debt. Few people are eligible for an OIC, and to be one of them, you must meet one of the following criteria:

  • Cannot Pay: If it is confirmed that you cannot pay your tax debt settlement within the collection stature, then you should file for an OIC under “cannot pay”. The IRS conducts a review of your capability to pay while considering every factor like your health and age.
  • Non-Accountabilit:If you can somewhat prove that you are not liable for the debt accumulated, then you can file for an uncertainty as to liability.
  • Economic Hardship:If unseen forces suddenly limit you from working, such as sudden serious illness, natural disasters, to name a few, then you will be given an offer. This diminishes the total debt, which in turn, saves you more money. Once an offer is made, the IRS tax debt is cleared.
  • Non-Collectible:The IRS makes an agreement to a permanent or temporary release of its collection, depending on your circumstances. If you are not having the means to pay, then you cannot pay at all cost.

If you believe that you qualify for any of the tax debt settlement repayments listed above, then don’t hesitate to explore more to land on a confirmed decision. You can now take control of the situation and turn your IRS debts around.

Here is some extra information on making your tax time smooth and efficient.

Choice of a Tax Software Program

Each year brings millions of people relying on professional tax preparers to organize their taxes. These professionals may be in the form of CPAs or tax agencies. Though these experts reduce the risk of errors and any discrepancies in your report, they are quite expensive. Due to this reason, many people opt for filing their federal and state tax returns on their own.

Even though the traditional way to prepare taxes is in the course of paper tax forms, but there are a myriad of people who now rely on the tax software programs for preparing their taxes and submitting it electronically to the state and federal tax agencies.

Similar to all software programs, each software has its own advantages. These software programs enable the taxpayers to prepare their taxes in an efficient and orderly manner.

Each program offers several versions such as standard, deluxe, and a premium version. However, all of them contain federal income tax return forms. Depending on the software version, it can contain both the state and federal income tax return forms. Some of the versions can also assist you in tax deductions and credits for bigger tax savings.

Advantages of Tax Software Programs

The user-friendly tax software caters to all. These programs usually offer a step-by-step process which offers the taxpayers an opportunity to finish their tax preparation in half the time as compared to the traditional method. The software even enables the taxpayers to transfer the data from a state tax return to a federal return. This assures the consistency of the information, since both the forms tend to contain the same data.

Most users comment on how they are able to save more money by using tax software programs. Tax preparers charge around $100 for the preparation of a tax return, whereas, tax software programs enable the users to start free. If the user wants to use other versions, then these programs are accessible for $60 or more.