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What You Need to Do if You Owe Back Taxes

After the long process of filing your taxes, you may feel defeated after learning you owe back money to the IRS. There are millions of taxpayers who owe the IRS every year, so you are not alone. Although it can feel like a burden, it is best to get your tax balance taken care of as soon as possible.

Don’t panic if you owe money. There are many reliable tax relief solutions for people who have to pay off back taxes to the IRS. Here are four steps you can take if you owe back taxes.

Set up a Payment Plan

Find out if you qualify for a payment plan. You can do this by contacting the IRS or applying for a payment plan online. A payment plan gives you the flexibility of a low monthly payment. The only caveat is that you cannot miss a payment, and you will not qualify for a payment plan if you have had one in the past five years.

This is probably one of the easiest ways to handle your repayment. A payment plan breaks your large sum into smaller more manageable payments allowing you to have a stress-free option to pay back your taxes.

Inquire About Lowering Penalties

The IRS can be forgiving in some circumstances. If you have a change in lifestyle that impacted your taxes from one year to the next, you may want to write the IRS a letter explaining your specific situation or potential error. You must ask for an abatement in your letter in order to lower your interest rate or remove any penalties on your account.

If you are approved for an abatement, you may be able to pay back your taxes without the harsh penalties and high-interest rates. It is easier to tackle your actual balance without having to worry about money being added to your unexpected debt.

Consult a Professional

Combing through tax language can be hard if you aren’t aware of the terminology. Consult with tax experts who are able to go through your previous tax returns. They may be able to find missed deductions or credits and help you file an amended return. If you are battling tax issues, it is in your best interest to seek a professional in order to get better results. An expert can help you find solutions and save a lot of time and money.

Change your Withholding Allowance

If you believe you will still owe back taxes going into the next year, you may want to revisit your Form W-4, Allowance Certificate from your employer. If you change your number of allowances, it will allow more taxes to be taken out of your paycheck, so you can get caught up on all of your tax payments. You may still owe at the end of the year again but making this change will help you avoid another large debt to the IRS.

Taking the initiative to repay your debt is the fastest and cheapest way to resolve your tax balance. The IRS gives a lot of options for repayment to tax-payers. By communicating with the IRS, you are more likely to get your balance settled a lot quicker than avoiding them.

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