Tax Refunds & Advice

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. 

Have you found that you owe the IRS money? This can be a lot or a little. It doesn’t matter. The only thing you should be thinking about is that you need to pay this debt as soon as you can. When you owe the IRS money it means that they will be watching closely to ensure that you pay as soon as possible. Of course, owing money and paying money is not the same thing. The worst situation to be in is to owe a lot and not be able to give the IRS what they want.

Instead of sitting around feeling sorry for yourself you need to open the lines of communication with the IRS. Tell them that you are aware of your tax liability, but that you are not going to be able to pay them in one lump sum. This is not something that they are going to fight. In fact, they will be glad that you are aware of your situation and willing to pay them in another way. They will more than likely suggest an installment agreement that allows you to pay your entire debt, but over the course of several months.

Those who are in a terrible financial place and have no prospects for a comeback in the near future may be able to settle their tax debt. This means paying less than what is owed. The IRS allows you to make an offer in compromise. Just remember, they do not have to agree to settle your debt.

It is a big deal to owe the IRS money. But you can make things much worse on yourself if you decide that you are not going to pay. 

When you owe money to the IRS you should consider this debt. Even though you may have other types of debt in your life, what you owe the IRS should definitely move to the top of the list. They can make your life miserable, and may have to do so if you are not paying what you owe. Fortunately, there is more than one way to pay your tax debt.

How much do you owe? The answer to this question should point you towards the right payment option. The more you owe the better chance there is that you will have to get creative with the way that you repay your debt. Fortunately, the IRS is reasonable enough to offer several options.

Being able to pay your debt in full should make you happy. When you do this the IRS will be happy with you, and you do not have to worry about the repayment process dragging on for many months or years.

But I really don’t have the money to pay everything I owe? This is when you need to think about your other options. One common way to pay your tax debt is with an installment agreement which is also known as a payment plan. The IRS gives you the chance to pay your debt in small increments every month. To make this beneficial to them, the IRS will charge you interest.

What about taking out a loan to pay tax debt? This is a possibility if you want to pay in full. If you can get a lower interest rate on a personal loan than you would from the IRS it makes sense to use this option.

Do you owe money to the IRS? If so, how do you plan on paying this debt?