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It’s tax season again and the deadline to file your federal tax returns is fast approaching.
It also means paying your tax bill – and potentially any taxes you owe from past years as well. Also called tax arrears, it’s something that 9.3 million Americans have faced in 2022 alone, according to the IRS. Fortunately, if you’re in this boat, there are solutions. Below, we’ll break down the ways experts say you can tackle these tax debts and emerge victorious.
Start by reviewing your tax relief options online today.
How to get rid of back taxes, according to experts
Here are some of the best ways to get rid of back taxes, according to the experts we spoke with.
Find tax relief
Tax relief companies offer a number of services that might help you. They will work directly with the IRS and can help you settle your debt, set up a payment plan, stop collections and wage garnishments, and sometimes also get late fees and penalties waived .
However, these services require payment. But, “depending on the amount of liability, it may be worth it,” says Paul T. Joseph, a CPA and founder of Joseph & Joseph Tax & Payroll in Williamston, Michigan.
Just be sure to research the company you choose to work with and be wary of any service that requires payment upfront. You should only pay if they are successful in resolving your tax issues.
Learn more about your tax relief options online today.
Work directly with the IRS
THE The IRS Has Lots of Options if your tax burden becomes too heavy. You can request an installment plan, for example. This allows you to spread the costs of your tax liability over time.
You can also make an offer in compromise, which is essentially a negotiation with the IRS. It allows you to settle your debt with a one-time lump sum payment (also less than what you currently owe). This is an option if paying your tax bill in full would “create a financial hardship,” according to the IRS.
The IRS offers a comprehensive list of options if you can’t pay your tax bill, along with the forms you’ll need to use them.
Call a tax professional
Hiring a tax professional like a CPA or tax preparer is another option. Not only can they advise you on how to respond to your tax debts, but they can also help you file your returns this year. They can also help you navigate some of the IRS’s more complicated processes, like offers in compromise, for example.
“The tax world is complex and there are programs that will help taxpayers in need, but it’s not always easy to navigate,” says Morris Armstrong, IRS Enrolled Agent and founder of Morris Armstrong EA . “A professional can help you.”
Request status “Currently not collectible (CNC)”
A final option is to request that your tax debts be labeled Currently Nonreceivable (CNC) by the IRS. This doesn’t wipe out the debt, but it means the IRS won’t collect it anytime soon — at least until your financial situation improves.
To do this, you will need to provide proof of your financial situation, including information about your assets, income and expenses.
Just keep in mind that even if you achieve CNC status, your debts will still accrue penalties and interest. This will only increase the taxes you owe in the long run.
Make your move
Whichever method you choose, it is essential to take steps to resolve your tax debts.
“If you don’t work with the IRS, they can take legal action to collect taxes,” says Moira Corcoran, CPA at Corcoran Business Advisors. “They will file a federal tax lien in public records to notify creditors – a legal claim on your property. It can also affect your ability to get credit, and the IRS can levy assets such as your wages, bank accounts , your Social Security benefits. , and property.”
In short, Joseph says, “the IRS generally works tirelessly to pursue an individual to pay their tax liability.”
If you are unsure how to go about managing your tax debts, contact a tax professional or tax relief company promptly. They can help you determine the best path forward.
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