When faced with the hard decision of having to pay your taxes, it can be not easy to know what steps you should take. This blog post will advise what to do when you cannot pay your taxes.
5 Steps on What to Do When You Cannot Pay Your Taxes
1. Know Your Options
When you cannot pay your tax, there are a few options you might want to consider. First, you can request a payment arrangement from the IRS. One can do it by Filing for a Payment plan or the Offer in Compromise. Each option has pros and cons, so it is best to learn about both options before deciding what to do.
2. Consult Your Lawyer
If you cannot pay your taxes, consulting a tax attorney is the best choice. They will look into your finances and find possible options to reduce your tax liability. However, not all lawyers will accommodate you in this matter, so inform them of this step before working with them.
3. Apply for an offer in compromise
Many people are not aware that this is a legitimate option available for them. This option will ensure that you will pay less than the amount you originally owe. Be warned that the IRS will charge a fee and interest on the offer, but this amount may be much less than what it would cost to pay off your total tax liability.
4. Installment Agreement
It is an even better option than the Offer in Compromise because it allows you to pay off your taxes over time instead of needing to pay them at once, as with the previous options. It is excellent because it will allow you to chip away at your debt and make it a little more reasonable. However, there is still a fee to pay off the interest, but it will be less than what it would be with an offer in compromise.
5. File for bankruptcy if you are unable to pay your taxes
If you cannot pay your taxes and none of the above options work, then filing for bankruptcy may be your only option. It will severely impact your credit report and may affect some of your other financial aspects in ways you do not want, but it can help relieve some of this burden from you if done correctly. It would help if you discussed the option of filing for bankruptcy with your tax professional before doing so.
The above steps are all considered viable options to help you with your taxes. Any of these options may seem drastic, but they can all be used in a way that benefits you. If a possible solution is unavailable through what you have, then the correct choice will be yours. Guardian Tax Law has been included on the list of top tax attorneys by the American Society of Tax Accountants. They are known for helping people with tax-related issues and are considered robust and very influential.
Guardian Tax Law
310 S Williams Blvd Ste 260,
Tucson, AZ 85711