Has tax debt been building up for you? You may find yourself in the same position as thousands of Americans every tax season. Tax debt can build up quickly and paying it off can seem like a daunting task. Taxes are complicated, and paying off your tax debt the right way is crucial to your finances. The IRS is the federal government, and has smart and intrinsic ways to collect tax debt, so avoiding paying your taxes is a bad idea. However, the IRS can be patient, as long as it believes that your tax debt will be paid off one day. The longer you wait, the more debt you will accrue. The IRS accepts monthly installment plans of up to 72 months to repay debt, and the longer it takes for you to pay the more interest and penalties you will have to pay to the IRS. Keep reading below to see if some of these debt settlement options are right for you.
Which Tax Debt Settlement Option Works For You?
Guaranteed Installment agreement: This is the most simple of the installment plans to obtain, the IRS divides the debt you owe by 30 months to determine the amount of your monthly payment. The amount of debt owed cannot exceed $10,000, however. It must be repaid in three years.
Streamlined installment agreement: This is a 72 month plan, and covers debt up to $25,000. This repayment plan will cause you to pay more interest since the IRS is having to wait longer to receive your payment. The monthly payments will be smaller than the Guaranteed Installment agreement.
Payroll Deductions: You can have a payment plan set up through taking out wages from your monthly paychecks. You must get confirmation from your employer to have this plan set up.
These are several of the tax debt repayment options offered by the IRS. Others include online repayment plans and direct debit plans. The IRS has many ways to collect taxpayers’ money, and are willing to negotiate a repayment plan that works best for you. Declaring bankruptcy is also an option if you think your tax debt may be too much for you to repay. The IRS can come after your assets if you do not start handling your tax debt. The worst thing a person can do who is in IRS debt trouble is to not ask for help as soon as possible.
Washington DC bankruptcy attorney Kevin d. Judd offers free consultations to review your back tax debt and see whether filing for bankruptcy or other relief can work for you.