Ways To Reduce Tax Debt and Pay Less Than You Owe
Did you know that there are so many types of taxes that Americans pay? Even with all of these taxes, people still find ways to pay less than what they owe!
Tax time is fast approaching. The clock is ticking, and you’re about to lose sleep over this problem. Will you get relief before you file your taxes?
Unfortunately, the answer is not black and white. Do you have back taxes and don’t know what to do? Don’t panic yet.
Let’s look at different actions you can take. If you want to reduce tax debt, here’s what you can do today.
Negotiating Payment Plan Options
Negotiating payment plan options for unpaid taxes can be a daunting task. Working out a payment plan with the relevant government agency may be a preferable option to paying a lump sum. In order to reduce the amount paid, it may be possible to negotiate with the IRS for a payment plan to allow for staggered payments over a period of time.
A taxpayer may qualify for a reduced rate if hardship conditions can be proven. It may be possible to reduce or even eliminate late fees and interest by showing evidence of severe economic hardship or by negotiating with the government agency directly.
In some cases, a tax debt payment plan may also be eligible for expansion or reduction depending on the individual circumstances of the taxpayer. Depending on the government agency, it may be possible to negotiate with them to make a full or partial payment to reduce the total debt owed.
Understanding IRS Settlement Alternatives
The Offer in Compromise (OIC) is one of the most popular ways to reduce your tax debt. It allows taxpayers to settle any taxes they can’t pay in full directly with the IRS.
In addition to the OIC, there are the IRS payment plan, the Currently Non-Collectible (CNC) status, and the Fresh Start Program. They offer different options to help taxpayers better manage their taxes.
Other strategies taxpayers can use to reduce the amount they owe to the IRS include targeting risky assets, deferring income, filing an extension, and filing an appeal. You can tap on professionals who can greatly help you in negotiating with the IRS.
Understanding the various tax settlement alternatives and their associated drawbacks is important for taxpayers looking for ways to pay their taxes, but potentially at a lower rate.
Taking a Proactive Approach to Reduce Tax Debt
A proactive approach to reducing tax debt starts with understanding the tax laws and making sure that you are compliant.
Oftentimes, taxpayers unknowingly find themselves in debt because of an overlooked deduction or a misreported item on their tax return. It is important to consult with a tax professional or financial advisor who can help identify potential deductions.
Additionally, taxpayers can make quarterly estimated payments to avoid accruing a large amount of debt come tax season.
Do These Strategies to Reduce Tax Debt
By employing a variety of strategies to reduce tax debt and pay less than you owe, you can work towards achieving more financial freedom for yourself.
To get started exploring the options available, consider consulting a tax expert or tax attorney for personalized advice that fits your unique situation. Don’t wait to take action – start now to become free from tax debt!
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