How to Get Out of Tax Debt and Gain Financial Freedom

If you find yourself owing back taxes to the Internal Revenue Service (IRS), you’re not alone. Many Americans face the challenge of dealing with IRS back taxes and regaining control of their financial situation.

Fortunately, there are numerous options available to help you with tax debt relief. These options include government relief programs and working directly with the IRS to reduce or eliminate your tax debt. Exploring these tax debt relief options can provide you with a way to tackle your financial situation.

Identify Why You Have Tax Debt
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The American tax filing system is widely recognized for its complexity, even for those with relatively simple tax returns. If you have an income, it’s usually required that you pay taxes to the U.S. government. Failing to pay your fair share can result in an increase in the amount owed as the IRS adds daily interest to your outstanding balance.

Late payment fees may also be imposed by the IRS, further increasing your overall tax debt. In some cases, the IRS may opt to garnish your wages directly, which can have a significant impact on your financial stability.

There are several common reasons for needing help with tax debt. Some of these include:

  • Incorrectly filing your federal income tax return.
  • Miscalculating your taxable income and/or deductions.
  • Missing the filing deadline, typically on April 15th of each year.
  • Failing to file your taxes for one or multiple years.
  • Withholding too little taxes throughout the year, possibly due to an outdated or incorrect W4 form.
  • Not paying enough quarterly taxes as a self-employed individual or business owner.

The availability of tax relief services often depends on your current tax debt status. The IRS classifies individuals with tax debt into different categories:

  • Liable: You owe taxes to the government.
  • First notice: The IRS has sent you a letter indicating the amount owed, the payment due date, and potential penalties.
  • Multiple notice attempts: The IRS has made various attempts to contact you about your tax debt through phone calls, mail, and even in-person visits.
  • Payment plan available: If you’re unable to pay the full amount owed, you may be eligible to set up a payment plan with the IRS. This is one of the available options for IRS debt relief assistance.
  • Collections: The IRS has transferred your tax debt to a collections agency, which may deduct from your paycheck, future tax refunds, and other government payments. They may also attempt to seize your home or other assets.
  • Seriously delinquent: If your tax debt reaches $55,000 or more, the IRS may revoke your passport.

If you owe money, it’s advisable to seek back tax help as early as possible, as it provides you with more options to choose from. Delaying payments will only lead to an increase in your outstanding balance, adding to both your financial burden and frustrations.

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By Admin