Should I Pay my Tax Debt in One Lump Sum?
Having tax debt is a big problem. This is not like credit card debt in which you can hide and nothing too bad can happen. Sure, a credit card company can send your account to collections and drag down your credit score. But they cannot really do too much past that. The IRS, on the other hand, has much more power. If you have tax debt and refuse to pay it they have the legal right to use a levy and/or lien to get the money you owe. Do you really want to deal with this?
How you pay your tax debt is your decision. As long as you are paying in one way or the next you will keep the IRS happy for the most part. Many people struggle with the question of whether or not to pay the debt in one lump sum or to look into one of the other available options. Again, you have to answer this question.
First off, do you have the money to pay all at once? If you do, paying in full will allow you to put this situation behind you once and for all. Most people who have the money to pay in full usually move in this direction.
Others, those who don’t have enough money on hand, can talk to the IRS about an installment agreement. This is an agreement between a taxpayer and the IRS which states how much money should be paid per month, and for how long. This is not as good as paying in full with one payment, but for many it is the only option.
You should pay your tax debt in one lump sum if you have the money. If not, you still have to pay; but you have to opt for another method.
