If there’s one thing which bounces off your head within seconds, then that is income tax. What makes the matter worse is that death and taxes are inevitable. You might be starving without money, but you are bound to pay off your taxes. One of the most excellent ways to handle taxes is to plan beforehand. Sit back and analyze the easy ways to pay off your tax debts. Jot down every little shortcut that takes you towards fulfilling the tax payment goals. Not getting enough tax refunds might be disheartening. But, there’s no big regret than not being able to pay off your full taxes.
Here are a few useful tips and tricks using which you can achieve your tax debt goals in no time.
Analyze The Taxes That You Owe
Start your tax payment journey by finding out the actual amount of money you owe to the government. As soon as you get your tax return, read the same with utmost concentration. You might want to find out if you actually owe the government any money or not. Also, link the return with all the tax benefits that the government entitles you to. After carefully reading the return, next comes the matter of calculating the actual amount. Do your calculations before thinking of ways to pay the debts.
Along with this, you can also compare the current year’s return with that of the previous year. Not only will this help you find out the extra debts, but also make you understand where you stand in the tax game.
Stay Away From Fines & Interests
Another thing that you must keep in mind is to keep the penalties and interests away. The tax debt itself is a huge amount to pay off. Start researching ways to minimize the fines as much as possible. You can achieve this goal by either using the underpayment method or the annualized income method. Both methods are highly trusted and reliable. Choose what works best for you and stay away from the penalties. If these don’t seem to work, another resort to keep the interests away is writing to the department. There’s no issue that doesn’t resolve by communication. Try explaining your problem to the IRS in detail by writing to the official email address. If the issue is a genuine one, the department does consider the matter and waive off the penalties. You can also find out the most effective ways to get relief from back tax debts.
Lastly, you must meet the deadlines as mentioned by the department, If you’re able to pay off the debt within the stipulated interval of time, then there’s no added penalty.
Consider The Installment Agreement Feature
For all the taxpayers who aren’t able to pay off the total amount in one go, the government offers other features. One such feature is the instalment agreement method. Now, you must be wondering how the instalment agreement method works. This is a facility that works similar to any other instalment. In this, you can pay off the debt in parts. That way, you don’t have to give away the huge amount in one go. All you need to do is apply for an instalment agreement on the revenue services’ official website. Further, pay the tax debt little by little and as per your comfort.
Don’t Forget The Offer In Compromise (OIC)
If you wish to settle your tax debts in less than the original amount you owe to the government, then this feature might help you. The offer in compromise (OIC) facilities is readily available by the government. In this, the IRS considers the entire matter and takes various parameters into account. These parameters range from the pay, total income, assets as well as equity. Further, after proper assessment, the department might lower the tax debt if you really need the same. You must find out if you’re eligible for the OIC by reading the requisites mentioned in their pre-qualifier.
Get The CNC Status When Needed
If you’re one of those who don’t get the offer in compromise, try the “currently not collectible” status. This works best for those who are nowhere in the situation to pay off their tax debts. By getting this status, you can use all the collection methods to fetch the required amount. However, this requires a proper demonstration and proof of your inability to pay off the debts. Some of the documents are financial information and other documents that support your claim.
Discharge Debts By Filing For Bankruptcy
Here’s another method of discharging your tax debts. By filling for bankruptcy, you can efficiently discharge your debts. However, this is one of the most challenging options to achieve as far as the revenue services are concerned. Also, you require lengthy documents like filing status of the taxpayer as well as old tax debts related information.
Consider Paying Through The Credit Card
It’s not always a smart move to pay off one debt by creating another. But, when nothing seems to work, you might want to finish the debts using your credit cards. There’s no additional fee when you choose to pay the debts using credit cards. However, the bank might charge you a fee depending upon the amount of tax.
Use The House Refinancing Options
Refinancing your house is always a better idea than using your credit card. This is because the home mortgage interests are much less than that of the bank ones. There’s no harm in paying off your debts using an asset like a home. Utilize your equities after proper analysis of the matter and make sure that you can afford it.
Paying off the debts can be a daunting task. But, with proper knowledge and research, you can easily pay the taxes without much hassle. All you need to do is find out the right ways to do so. Consider the facilities offered by the revenue services to get the best deals. From offer in compromise to instalments, you can make the most of any feature. When nothing seems to work, go for the house refinancing or credit card options.