Tax filing season is upon us and many people are already wondering how they’ll handle pending tax issues. For those who anticipate they’ll owe money or are dealing with delinquent tax issues from prior years, this can be a stressful time.
Perhaps the most stress comes from the unknown. Many people who might owe money to the IRS experience fear because they don’t know what to expect. They may have heard horror stories about friends or family that have had IRS issues with terrible outcomes.
If you are concerned about delinquent taxes and need immediate tax relief, you don’t have to sit in dread, waiting for the “shoe to drop.” You can actually take some steps to proactively tackle the problem.
For starters, you can call the Tax Debt Relief Hotline at 888-452-7841 if you owe them back taxes. Once you take a step to resolve the situation, you may find that your fears were greatly exaggerated or even unfounded.
Here’s what to do if you are worried about owing money or already owe money to the IRS.
Prepare your tax filing early
Even if you think that you’ll owe money that you can’t pay by the filing deadline (April 15th,) you should still prepare your tax filing as soon as possible. This will do a few things to help your situation.
First, it will relieve the stress of preparing and filing your return at the last minute. Aside from losing sleep, you could inadvertently make mistakes on your return by rushing to make the deadline.
Secondly, preparing your return early will give you a real sense of what you might truly owe the IRS. Some people are extremely fearful that they owe a lot of money to the IRS, when in reality, they may owe a fraction of this anticipated amount. People who believe they owe large amounts may feel hopeless, not do anything, and end up making the situation worse than it really is.
Thirdly, preparing a return early could give you time to plan for resolving your tax debt. Once you learn that you will owe the IRS come April 15th (or March 15th for businesses,) then you can plan early to have the balance paid by the appropriate deadline.
Research your options
If you are not in a position to pay the entirety of your tax liability immediately or already owe money, now is a good time to explore your options. There are a few things you could do from here.
Consider getting help
You may have reservations about dealing with the IRS on your own and understandably so. it might be wise to first seek out a tax pro to help you. Some options for tax debt relief include:
- Certified Professional Accountants (CPA)
- Enrolled Agents
- Tax Debt Relief Counselors
- Tax attorneys
- Low Income Taxpayer Clinics (LITCs)
Ideally, you’d reach out to an experienced tax debt relief professional before attempting to communicate with the IRS on your own. If you don’t know what you are doing, you could mistakenly misrepresent yourself and lose the opportunity for effective negotiations on your IRS balance.
Get a complete grasp of your tax issue
Familiarize yourself with common terms and potential solutions so that you can screen your potential tax advocates effectively. It’s like knowing more than a little bit about cars before letting the mechanic oversell you on solutions you might not need!
For starters, you should, at minimum, know something about various options like:
- Offer in compromise
- Not collectible status
- Financial hardship payment plan (partial payment installment agreement)
- Innocent spouse relief
- Replace IRS “Substitute for Return” or SFR with actual returns
Speak directly to the IRS
Sometimes, it is appropriate to speak with the IRS directly. If you must deal with them directly, tread lightly, and aim to simply find out information such as the exact balances owed and timeframe in which to pay. Keep your conversation very brief and do not divulge any unnecessary information.
In some cases, they could make moves to collect monies owed much sooner than you think. Unexpected bank levies, tax liens, and wage garnishments can be avoided if you reach out to an IRS agent sooner than later. But do so only if you’ve been advised or have someone to act on your behalf, such as a tax debt relief expert.
Be sure to respond to any IRS notices in a timely manner. Let them know that you’ve received their communications and are working to a solution.
The only downside to this approach is that you may not be fully equipped to adequately represent yourself with them, one-on-one. If you are dealing with an aggressive or hostile agent, you could agree to a deal that isn’t in your best interest. If this occurs, ask someone for help.
Owing money to the IRS can be frustrating and, in some cases, traumatizing, but it doesn’t have to be. With IRS debt, your worst enemy is inaction. The interest and penalties accrue at alarming rates. Get out in front of your problem. Be proactive. As long as you communicate with the IRS and respond to their communications, you will find that they are usually willing to work with you.
Hopefully, this soothes your fears and motivates you to tackle your IRS issues head-on!
Aja McClanahan is a blogger, freelance writer, and book author who covers personal finance and small business topics. She resides in Chicago with her two children and husband.