Tax debt is an extremely unfortunate and sensitive situation. If you get behind in payments, you can find the interest building up more and more until eventually, you are stuck with an insurmountable amount of debt. Is that the end for you financially if that happens? Fortunately, there are a few ways that you can settle any outstanding tax debt that you have and get your life back on track.
It will require some sacrifices and smart spending, but you can definitely get yourself out of the hole. Here are the top 3 ways in which you can settle your tax debt once and for all.
An Offer in Compromise
One of the easiest ways to settle your tax debt and make things easier for you is to compromise with the IRS. While the IRS wants to get their money, they also understand the situation that you are in and understand that you are probably never going to pay them the money that they are looking for. If you find yourself in a situation like this, you need an offer in compromise to solve your problems. An offer in compromise is a deal between you and the IRS to pay less than what you actually owe.
It helps to provide you some relief and works to alleviate a lot of the debt that you have built up. To be eligible, you have to have filled out all of your tax returns and then make an offer in compromise application to the IRS. They will review your file and determine if you are eligible for this. If you are looking for a way to settle tax debt, attempting to compromise is something that you should aim for.
Create a Payment Plan
The next thing you can do to settle your tax debt is to create a payment plan with the IRS. This will help to lower the interest that you are paying while also having you make smaller payments each month in the form of instalments.
This can take a huge debt and break it down into smaller more manageable chunks. It is a great way to take control of your finances and come up with something that works for you. While there will be some interest added on, it is much better than the standard insurance you would be incurring without the plan.
The final thing that you can do to settle your tax debt is to request a payment delay. If you can prove to the IRS that making the payment would prevent you from affording basic living expenses, you can be given a delay on the payment. This does not free you from paying however and there will be some interest that builds up during this time. The benefit to a payment delay however is that you are not going to be incurring other fines for being late.
These are 3 ways in which you can work to settle the tax debt that you have built up. Getting financial freedom again is a huge milestone and it is something that you should be working towards. Find what method works for you and then speak with the IRS. How do you plan on solving your tax debt?