damircudic | E+ | Getty Pictures
If you cannot afford to cowl your full steadiness, chances are you’ll apply for an installment agreement, a long-term month-to-month cost plan.
You might qualify for those who owe $50,000 or much less, together with tax, penalties and curiosity, and the IRS will not approve the plan with unfiled returns.
After all, you may wish to comply with an reasonably priced month-to-month cost, and you may must pay future taxes on time to keep away from defaulting in your settlement, the Taxpayer Advocate warns.
“It is a very fast course of,” Collins mentioned, explaining you’ll be able to apply on-line, by cellphone or via a bot.
Another choice, often called an offer in compromise, might help you accept lower than you owe. Nevertheless, the IRS encourages taxpayers to discover “all different cost choices” first.
“In case you can present that you’ve got monetary challenges, you might be able to scale back the legal responsibility and settle it with finality to place the tax behind you so you’ll be able to transfer ahead,” Collins mentioned.
To qualify, you’ll want to be present on all returns, until there is a legitimate extension on file, and up-to-date with required estimated tax funds.
There’s additionally a “currently not collectible” status, the place the IRS might again off from making an attempt to obtain unpaid balances for a time period, Collins defined.
Nevertheless, if authorized, your excellent debt should still accrue penalties and curiosity, and the IRS might use your future refunds to cowl the steadiness, according to the Taxpayer Advocate. And you will want to remain present on future taxes.
To qualify, chances are you’ll must file overdue returns, together with Form 433-A, Form 433-F or Form 433-B and different paperwork, to indicate proof of your monetary hardship and lack of ability to pay.