Credit counseling professionals can explain the effect that debt settlement companies’ recommendations will have on your credit report, as well as any related tax implications. Debt relief companies may not disclose or may minimize, the effects their plans will have on your credit report and tax situation.
Before you work with a credit counselor, it is important to know the important differences between non-profit credit counselling programs and for-profit debt settlement (or settlement) companies. If you are struggling with debt, credit counseling might be one option to consider. If you are struggling to figure out a way to pay back the IRS money that you owe during this tax season, you might want to look into whether or not you are eligible for any options for debt forgiveness.
If you owe back taxes, an ATO installment plan or debt forgiveness through the IRS can provide needed tax debt relief. Tax debt forgiveness comes in the form of a payment plan or a reconciliation, where the IRS agrees to forgive your tax debt for less than the total amount owed. An IRS payment plan allows you to repay your tax debt in manageable monthly payments over a period of time.
The IRS allows most tax debtors to pay off their back taxes in monthly installments. Continue paying off your remaining balances in monthly installments as long as the IRS is considering your proposal. If you can convince the IRS you do not have money to pay the tax but can afford the payments over time, you may be able to request a plan of paying the tax each month on an installment basis. You will not need to establish a payment plan or make set monthly payments, as with a personal loan, so you can make the tax payments according to your schedule.
Make sure that you pay enough to cover taxes for this current year because the Internal Revenue Service will want to see that any required deposits are made in full. Call the IRS to verify all of your required business tax returns are filed. You must include the previous year’s tax returns (four years in case of Chapter 13 bankruptcy). If you owe taxes, but cannot repay them in full, consider filing a Request for Installment Agreement (Form 9465) with your return.
The IRS will turn back any Offer-in-Compromise (OIC) request that is recently filed unless you filed all of the required tax returns and made any of the required estimated payments.
If you cannot afford to pay what you owe, you must tell your tax collectors why. Unless you are bankrupt, on the verge of bankruptcy, or unemployed and will probably stay that way, the IRS tax collectors are going to hover.
Failing to file or pay taxes on time can have severe consequences, like interest accrued and property lien, which is why it is essential that you get IRS debt relief ASAP. Small businesses facing tax debt are faced with daunting power from the IRS and various methods that the agency may employ to collect unpaid taxes – many of which can mean the demise of your business. Fortunately, most small businesses who are behind on their taxes can negotiate a tax debt settlement with the IRS — provided that they understand the details about dealing with this intimidating collection machine. Because penalties for not filing can add up to 25% of your overall tax bill.
The government will also hold back any tax refunds that you are owed by the business until you have paid the tax you are owed with interest. You may request $1 in credits against your return, but only up to the amount of your tax obligation. The total amount of credits claimed cannot exceed 75% of your tax liability. You may also claim $1 in credits for certain utility fees administered by the state corporation commission.
A credit of $1. An Earned Income Tax Credit is equal to 10% of the difference between qualified expenses in that year and 50% of the average amount of qualified expenses in the 3 prior years. The credit is worth 10% of the lesser of this year’s qualified expenses in any 3 prior years. These credits may be claimed against wages taxes quarterly.
If you make under $72,000, you can file for free, or you can call (800) 829-1040. In cases where you expect you may be unable to pay back what you owe within six years, bring business records, bank statements, credit information, a balance sheet, and any other documents that may strengthen your case for a hardship exception and a possible tax bill reduction. If you are struggling with small amounts of tax debt, this plan can help you stay debt-free long after you address your current financial situation.
Tax debt forgiveness programs can help you avoid fees that you would be charged if you did not make a payment by a certain deadline. Tax debt relief is the common name for programs that help you repay the tax debt, like IRS debt payment plans and services provided by third-party tax debt relief companies. If you pay upfront fees to the tax debt relief companies, which can run into thousands of dollars, the companies claim that they will reduce, and even wipe out your tax debt, while also stopping collection from your past due taxes, while applying to the legitimate IRS hardship programs.
In addition to accepting, Community Tax offers many resources and services that are especially valuable for people who have minor tax debts. Community Tax does not have the lowest debt-minimum requirements in the tax debt relief industry, but we still think it deserves a Best for Small Tax Debt title because of the abundance of resources and services geared toward those with smaller amounts of debt.