What to Do When You Owe the IRS a Huge Amount of Money

Owe the IRS

Everyone hopes to come out filing taxes successfully each year, with some managing to get some of their money back in the process. However, others end up owing money to the government, leaving them stressed and worried about the future. In the severest of scenarios, they may lose their homes and other valuable assets, adding to their worry.

Fortunately, a few timely interventions, such as hiring professional tax settlement services, can help taxpayers ward off unpleasant consequences without hassles. Also, it can help them get their lives back on track once the issue is settled relatively quickly.

So, read on to know how a tax relief company can help and the other things you can do when you owe the IRS.

Dealing with a large IRS tax debt

Understand the consequences

Owing the Internal Revenue Service money can lead to unpleasant consequences if you fail to deal with the issue correctly. For instance, you might face a lien on your property or business and wage garnishments on paychecks. In some cases, even your bank account may be levied by the IRS so that they can seize any funds to get what you owe.

Additionally, there are other ways that owing the IRS money can impact you. Your passport will likely be revoked (or suspended) because of an unpaid debt with the government, which means you won’t be able to travel for work or even a family emergency.

File returns and extension

It is unwise to avoid filing tax returns when in debt as you will automatically incur a five percent penalty for each month you owe towards failure to file. Filing an extension is also advisable, which many people neglect. An extension will give the agency more time to collect what you owe and keep interest from accruing on your debt. Typically, the extension will get you six more months to sort the issue out. If you are still unable to pay post the extension, you will incur a 0.5 percent penalty.

Choose the right way to pay

Paying taxes on time and in total is essential to avoid further penalties. If you don’t, you will face more penalties and interest charges that can add up very quickly. The trick is to choose the right payment plan for your specific requirements. For instance, you could pay the entire amount at once in a lump sum.

Alternatively, you can choose an installment plan, wherein you can pay monthly for up to six years. Note that you must qualify for the payment plan you wish to choose.

Get help from a tax relief company

Hiring professional tax settlement services can be a significant step in dealing with owing money to the IRS. These companies have unmatched industry experience, hiring attorneys specializing in back taxes and other areas, tax industry specialists, and various experts to handle such cases. Once they gauge if you qualify for the settlement via a free phone consultation, they will begin negotiating a fair amount with the IRS.

In many cases, they can get incredible results, with many taxpayers having to pay only a fraction of the amount they originally owed. Also, since these firms are experienced in dealing with tax authorities, they can instantly catch erroneously rejected claims and file an appeal citing the same to get their clients a positive result.

Therefore, a reliable tax relief firm can help you with the above-listed steps and negotiate an excellent settlement.

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Categorized as Finance

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