People from every income level and walk of life have suffered the effects of the global pandemic. With shutdowns, shelter-in-place orders and changes in consumer habits, financial constraints are a key consideration for many Americans – and just before Tax Day.
You might already realize you will owe money for 2019. Regardless of whether you are prepared to resolve your delinquent tax bill or cannot envision a way to improve your current financial situation, you can likely reduce the penalties owed if you file on time. Before you file your return, you may want to be aware of your potential payment options.
Form an agreement with the IRS
Depending on your circumstances and amount of money owed, you would be wise to learn about the various courses of action applicable to you.
The IRS offers both short and long-term payment plans in addition to installment agreements. There is also the potential to settle your tax debt at a lower rate through an Offer in Compromise (OIC).
Since the IRS settles few debts through an OIC each year, there are some things you should consider before you submit an offer. For example:
- Temporary financial hardship may not meet eligibility requirements
- Filing compliance for the previous six years is necessary
- Businesses may not qualify because they have the potential to dissolve tax debt along with the entity
- A down payment and significant fees may be required
- You must prove your withholding or estimated payments will fulfill your tax bill when you file next year
Numerous complexities factor into tax laws. While it is virtually impossible to anticipate how the IRS will respond to your unique situation, a qualified tax professional can help you utilize available deductions and guide you toward a viable solution for your financial future.