How To Avoid Problems With The IRS When You Can't Afford To Pay Your Tax Bill
If you've been working on your taxes and are shocked to discover you owe the IRS more money than you can afford to pay, you may be on verge of panic. You can't avoid paying the IRS, but there are some things you can try that may help lower the amount you have to pay or make it easier for you to pay what you owe. Here are some suggestions.
Be Accurate And Truthful To Avoid Future Problems
If you earned money, then chances are someone reported it. Nothing gets by the IRS. Even if you don't report part of your income in an attempt to lower your taxes, the IRS may already know about it and bill you for it later after an audit. Also, don't make the mistake of claiming someone as a dependent if they really aren't even though it may be tempting to do so. If you have an elderly parent or adult kids living at home that you support, make sure you understand the regulations about claiming them as dependents before you do so. Misreporting your income or dependents can cause more problems with the IRS down the road, so it is best to fill out your forms as accurately as possible and then deal with the results.
Hire A Tax Preparer To Get The Most Deductions
The could be deductions and special tax breaks you don't even know about that could lower the amount you owe. It could be worth the expense to hire a tax preparer to go over your income, expenses, and life circumstances to get the most deductions and credits possible. For example, you may get a credit in the form of Earned Income Credit that will help lower your taxes due. If you have medical bills, moving expenses, or any other big, one-time expenses, these could factor in also. If you started a business or began freelancing and have to pay a huge business tax bill, then a tax expert can help you with filling out Schedule C for home office and business expenses, which will lower the amount you have to pay. All these adjustments are done according to tax law so you won't have to worry about triggering an audit with the IRS like you might accidentally do if you don't understand how to claim business expenses.
Set Up An Installment Agreement
If a professional runs the numbers and you still have to pay more than you can afford to, then set up an installment agreement with the IRS. An installment agreement breaks down the amount you owe into small monthly payments so you can pay your tax bill off in the coming months or years. Installment agreements have rigid requirements. You don't want to miss payments or get in the same situation until the first agreement is paid off, or you may run into problems with the IRS. If it looks like the current year will present the same situation at tax time, get advice from the IRS or a tax professional about what you need to do so you won't owe so much next year. For help with setting up an installment agreement, contact a location like the Bronson Law Firm PC.
If you owe the IRS money and you can't afford to pay it, you should call the IRS and talk to them or communicate with them through your tax professional. Avoiding the IRS is never a good idea because they have the power to seize your possessions, including your bank account, or they can garnish your wages to get the money you owe. You can usually avoid these extreme measures by setting up an agreement with the IRS and paying as much as you can afford until your bill is settled.
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