The inability to pay taxes on time affects a large percentage of Americans. This can result in huge IRS debt. Some common reasons people have IRS debt are unpaid taxes, underreporting income, non-compliance with the laws, etc. Fortunately enough, the IRS offers chances and different programs to help you pay back the debt and get to square one.
If you are a business looking to avoid such problems, it is important to control your finances and promptly prepare for the tax season. Leaving everything for the last minute is never pleasant. It is understandable that owners often get tied up in various responsibilities and forget about taxes. Seek professional assistance for tax services in Savannah today.
Four ways to pay off your IRS debt
- Use a personal loan.
Tax debt can be stressful. When you do not pay on time, the IRS can impose penalties and fines with an interest of 5%. While this may not seem practical to you, using a personal loan to pay the IRS debt is a viable option. Consider your debt-to-income ratio, interest rates, and lender fees before you agree to the loan. With a good credit score, you should be able to get up to $100,000 in personal loans, enough to pay off your debt.
- Apply for an installment plan.
An installment plan between you and the IRS allows you to pay the debt over time by making small payments within regular intervals. By making complete payments on time, you can pay your debt without having to borrow money from someone else.
However, note that fines and penalties will continue throughout the period of the agreement. Also, not everyone may be qualified for an installment plan. If you do meet the criteria, make sure to read the terms carefully.
- Penalty abatement.
If this was your first mistake with tax filing, you might be able to get rid of the penalties through penalty abatement. When you file for penalty abatement, the IRS will waive the failure to file or pay, and misreported information penalties if it is a first-time error. However, it is important to maintain a good history with the IRS to do this.
- Use your credit card.
Using your credit card to pay the IRS debt is another way you can avoid fines and penalties. If you are facing asset seizures, this might be a good option for you. Pay the debt using your credit card and pay the bill on time when your income comes in. However, make sure not to delay payments and ruin your credit score.
