Here are Some Important Tips on How to Get Rid of Tax Debt
It’s income tax time again, Americans: time to gather up those receipts, get out those tax forms, sharpen up that pencil, and stab yourself in the aorta. – Dave Barry
Though Mr. Barry has exaggerated it highly, it’s a fact that taxation is an inescapable truth of life and filing taxes can be an arduous and nightmarish task for some. It is worst for those hounded by the IRS for tax debt. There are many ways in which you can get IRS sleuths on your tail. The easiest one is to refuse to pay your taxes! You can run as much as you want from this debt, but you can’t hide from the all-seeing, all-pervading IRS!
Jokes apart, unforeseen situations crop up all the time creating a cash crunch, which makes it difficult for many to pay off their tax debts. Long due debts can invite tax liens, ultimately leading to loss of property and assets. There are ways in which you can relieve yourself of this burden, which I will discuss, further in this Buzzle article.
How to Effectively Lighten Your Tax Burden?
Well, obviously the only way out is to pay off the debt in full. The question is, how do you arrange for the time and funds required to do so. Here are some of the strategies which can singularly or in combination, help you out in clearing off your taxation debt.
Call in a Professional Tax Consultant
Treading through the maze of tax laws can be a tough job and it helps if you have a tax consultant by your side, who knows his way around them. Tax consultants are professionals who know the ways in which you can climb out of the debt hole, that you have dug for yourself. According to the nature and size of your tax burden, they can suggest the measures that can be taken to get rid of it, once and for all.
Claim Tax Deductions to Lower Debt
One way of fractionally reducing your debt is claiming deductions on the basis of your expenses. From fuel expenses to home improvements, there are many types of tax deductions made available to reduce your tax debt. A tax consultant can guide you in this regard.
Start Saving & Cut Down On Expenses
When you are knee deep in debt, you can’t afford to splurge. You need to save and smartly cut down expenses to bare essentials, while focusing on increasing your income, by working extra harder. That way, you can eventually save up enough to pay up your debt.
Raise a Personal Loan
While digging up another hole to fill one dug before isn’t the most feasible proposition, raising a personal loan to pay off tax debt makes sense in times of desperation. Of course, this only transfers debt, without clearing it, but it buys you more time.
Arrange With the IRS For Payment of Dues Through Installments
Another way out is to negotiate with IRS and ask for an installment based settlement plan. A provision for this has been provided through the IRS Form 9465, which is a formal application, for a installment based payment agreement. This form must be duly filled and attached to the tax return you file. Meanwhile, clear off as much of your tax debt as you can, while asking for a settlement plan for the rest.
Earning more, saving and asking the IRS for an installment based settlement seems to be the most sound proposition of all, as far as clearing tax debt is concerned. Declaring bankruptcy to discharge debt is undoubtedly the very last proposition I would like you to consider as it leaves a permanent stain on your credit record, which makes any availability of credit in the future, almost impossible. You are bound to find assistance from the IRS if you ask for an installment based settlement plan. Consult tax advisers, who can provide you with the expertise that is required in solving taxation debt problems. Plan well and stick to the plan, to be free of the tax burden eventually.