How to Get Out of Tax Debt and Gain Financial Freedom

If you owe back taxes to the Internal Revenue Service (IRS), you’re not alone. In fact, millions of Americans struggle with dealing with IRS back taxes and getting back on track with their finances. 

If you’re in a similar situation, we have some good news: you have tons of options to get help with tax debt relief, like government relief programs and working directly with the IRS to reduce or eliminate your tax debt. Let’s explore your tax debt relief options and dive into some of the most common reasons for owing back taxes in the first place.

Identify Why You Have Tax Debt
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The American tax filing system is notoriously complicated, even for the simplest tax returns. If you earn an income, you’re usually required to pay taxes to the U.S. government. And if you don’t pay your fair share, you could end up owing more when the IRS adds daily interest.

The IRS might also slap you with late payment fees, which only adds to the total you owe. In some cases, the IRS might even take your tax debt payments right from your paycheck, which can take a toll on your finances.

There are many reasons you may need help with tax debt. Here are some of the most common reasons for owing money to the IRS:

  • Filing your federal income tax return incorrectly
  • Miscalculating your taxable income and/or deductions
  • Missing the filing deadline (typically April 15th of each year)
  • Not filing your taxes for one or multiple years
  • Withholding too little taxes throughout the year (from an incorrect or out of date W4, for example)
  • Not paying enough quarterly taxes as a self-employed individual or business owner

The tax relief services available to you often depend on your tax debt status. The IRS has different categories for people who owe money in taxes:

  • Liable: You owe taxes to the government.
  • First notice: The IRS has sent you a letter indicating the amount of taxes you owe, payment due date, and potential penalties.
  • Multiple notice attempts: The IRS has tried to contact you about your debt by phone, mail, and even in person.
  • Payment plan available: If you’re not able to pay the amount owed in full, you may be able to set up a payment plan with the IRS, which is one of the IRS debt relief help options that’s available.
  • Collections: The IRS has sent your tax debt to a collections agency that may deduct from your paycheck, future tax refunds, and other government payments and may also attempt possession of your home or other property.
  • Seriously delinquent: Your passport may be revoked if you owe $55,000 or more in back taxes.

If you owe money, you might want to look for back tax help as early as possible, since you’ll have more options to choose from. Delaying your payments can only add to your owed balance – and your frustrations.

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By Admin