So you feel like you’re in a hole right now, drowning from tax debt.
You spend most of your time searching Google to get an understanding of tax debt forgiveness or find some sort of resolution firm that can assist you in getting in good standing with Uncle Sam (the IRS)
Tax debt forgiveness is possible if you meet certain conditions, and you can even receive affordable payment plans to make it easier to pay off the debt.
The worst case scenario is ignoring the IRS, receiving certified mail letters, only to realize they’re about to garnish your wages, put a lien on your home, or revoke your passport.
Take the easy and responsible way out by understanding your options in this article.
Let’s begin.
Understand Your Tax Obligations
The first step to resolving your taxes is understanding what you owe. This includes federal income tax, self-employment tax, and possibly state and local taxes.
Your tax obligations will vary depending on your business structure (sole proprietorship, LLC, etc.). It’s important to familiarize yourself with the specific tax laws applicable to your business type.
You will also want to file 1099s for your contractors if you paid them over $600.
Keep Accurate Records
Keeping accurate and up-to-date financial records is paramount.
This includes tracking all income, expenses, and potential deductions.
Implement a consistent bookkeeping system, and consider using accounting software to automate the process.
Pay Your Estimated Taxes
Small business owners typically need to pay estimated taxes quarterly. Calculate these payments accurately to avoid underpayment penalties. If you’re unsure about how much to pay, consider consulting with a tax advisor.
Resolve Outstanding Tax Debt with IRS Fresh Start Initiatives
– > Offer in Compromise (OIC) (The IRS compromises on the total cost of your debt)
– > Partial Payment Installment Agreement (PPIA) (You end up paying installments on your debt of $100-$400 per month instead of lofty payments like $1k+/month)
– > Currently, Non Collectible status (CNC) The IRS, in the instance, cannot pursue your debts because you’re in a challenging situation
– > Penalty Abatement (first-time or reasonable cause): The IRS may delete the tax debt altogether and forgive you for the trespass.
If you have outstanding tax debt, it’s essential to address it promptly.
The IRS offers various payment plans and debt resolution programs, such as an Offer in Compromise or Installment Agreement.
These installment agreements can be thought of as “Klarna” or “Flex Pay” for troubled tax-payers. If you know how to negotiate with the IRS, they are the perfect opportunity to save on your tax debt and avoid paying the whole amount in expensive increments.
Work With Us to See Which of These Suits Your Needs – >
Consult with a Tax Professional
Tax laws are complex and ever-changing. In fact, the average troubled taxpayer has four to six years of back taxes.
Consider hiring a tax professional who can offer expert advice tailored to your business’s unique needs.
They can assist you in tax planning, resolving tax debt, and ensuring you take advantage of all available deductions and credits.
Remember, being proactive and organized in your approach to taxes can save you time, stress, and money in the long run.
Being responsible and managing your taxes is key to living a peaceful life without having the IRS peeking over your shoulders.
