What to do when you owe money to the IRS?
Although many Americans get tax refunds, some taxpayers may end up owing money to the IRS. There is about 8.2 million Americans who owe taxes each year. Sadly, some of these individuals continue to fall behind and don’t take the necessary steps to avoid the common tax pitfalls. Taxpayers who can’t afford to pay their taxes often feel overwhelmed and defeated. It’s important you understand that there are practical ways to manage your taxes and find tax relief. A Fort Lauderdale tax attorney can help you in your time of need and alleviate your tax burdens.
Do you really owe the money?
Perhaps you feel that you owe too much money to the IRS. It’s important you look for errors that may have caused this. You may have missed a question or checkbox. All questions need to be answered properly. You can also compare your refund with previous years. If you have more or less the same tax situation but the bill is higher, chances are you made some mistakes when filling out these forms. Remember the IRS can also make mistakes. Call them and ask them to clarify your situation.
Reduce penalties and interests
Penalties and interests can add up to your tax bills. Try to reduce these charges by using underpayment of tax penalties, abatement of penalties, and paying as soon as you can. Remember your tax is subject to penalties and interests. Try to file early and pay your tax bill soon. If you don’t pay by the deadline you will be charged extra penalties and fees. You can also write a letter to the IRS asking for “abatement.” Explain them your situation. The IRS may remove some of the penalties or interests. Perhaps someone in your family had a serious illness or another unfortunate event may have occurred. It’s a good possibility the IRS will waive the penalties.
The installment plan
If you can’t afford your tax bill, there is always Form 9465 where you can set up installment payments. This is only possible if the amount you owe is less than $25,000 and you prove you can’t pay. You will have to pay your taxes in three years or less though and if you had an installment agreement within the last five years or you don’t follow tax laws, you are disqualified.
Things to avoid
- Don’t use a high-interest credit card to pay your debt – The IRS interest rate is far lower than these credit card companies. You will end up paying much less if you stick to the IRS’ plan.
- Don’t use money from retirement- Taxpayers who use money from their retirement end up owing a penalty also.
An experienced tax law attorney from our firm can prove helpful during these difficult times. A Fort Lauderdale tax lawyer attorney can help you dispute your tax matter with the IRS. We offer a complimentary consultation to discuss your tax issues. Call us today!