It’s not all that rare of an occurrence for most Americans: you owe taxes not from the current years, but from years that have already passed.
If you’re behind on your taxes, an already complicated process can get even more complicated. It may feel as if you are unable to get out of the debt you’re in, as penalties can build up and threaten to overwhelm you.
If you do owe taxes for previous years, it doesn’t have to be the end of the world. With a few tips employed, you might be able to pay off your due and get back on good standing with the IRS. Is that the kind of good news you want to hear this tax season? Then read on and we’ll walk you through everything you need to know.
1. Look Into IRS Payment Plans
One of the major reasons people feel overwhelmed when thinking of paying off taxes they owe? It’s because the numbers can be so large. The idea of paying off owed money as one big lump sum is enough to make one’s stomach drop.
It might just seem downright impossible to budget that cost into what you currently have.
However, there’s no reason you have to pay off your IRS debt in this fashion. The IRS has a number of monthly payment plans that can help make it a lot easier to pay off what you owe. They can break the total down into smaller monthly increments with fairly reasonable interest rates.
The sooner you pay up the less you’ll have to pay thanks to the interest, but it’s still a good idea to break your payment into parts if you need to.
2. Stay Organized
The process of doing taxes can be so complicated and many people fall behind just because they got lost in the process.
Luckily, there are services out there that can help you. One of the most popular is Turbo Tax, which helps you file in an organized manner and keeps on top of the requirements you need to fulfill. Mighty Taxes says it’s one of the most popular tax programs in the country.
Depending on what type of income you have, you might also even be able to get it for free.
3. Offer In Compromise
If you really don’t think you’ll be able to pay back what you owe to the IRS, you might be able to make what is known as an offer in compromise.
This is a negotiation and settlement that allows you to cancel out your back taxes for less than you actually owe.
It’s difficult to get the IRS to accept an offer in compromise, and they reject most applications they get. They’ll need to do a thorough look at your financial situation and really deem you unable to pay before they’ll allow a smaller total to be collected.
Tips for When You Owe Taxes
If you owe taxes from previous years to the IRS, it can be hard to figure out what to do. The above tips can help get you on the right path.
Need more financial advice? Keep scrolling our blog for more.