Tax Debt Relief – Questions You Should Be Asking Yourself
Sunday, 14 February 2021

Did you know according to the IRS (internal revenue Service), in America alone, the tax debt has amounted to $527 billion as of the year 2020? This astounding number is a result of many things however one of the most prevalent reasons is that businesses and individuals often file their taxes incorrectly.

As a result, many businesses end up with bad tax debt or outstanding amounts they owe the IRS. To understand the concept, let’s take a small step back and define what tax debt is.
 
 

What is Tax Debt?

 
In its simplest explanation when you are in debt, it means you owe another entity a certain amount of money. It could be a big amount or a small one. When it comes to tax debt this is then the difference between taxes owed and those that are paid. Further details can be found here. When you owe more than you had initially expected, it can’t be a pleasant experience, however, there are ways to avoid this and be behind the line, far behind it!
 
Divorce is another reason why people end up in debt. In the USA, the law regarding a divorce or settlement between two married couples when they separate is somewhat tedious of a process and should always be handled by a professional such as a divorce lawyer or solicitor advisor.
 
The main items or assets in a divorce are usually divided between the two parties when things go well, however sometimes you may need to pay a Capital Gains Tax, after the separation: https://www.gov.uk/money-property-when-relationship-ends/tax and this is what sometimes causes the debt because it will include items such as maintenance payments, child care, rent for the ex-spouse if they don’t have a job and such. In the end, all these can add up.
 
 

What’s the Solution?

 
Three words – Tax Debt Relief. For those who are not aware of this option, this article will give some insight into it and how it can help get you out of any tax debt you may have or may potentially end up having if things aren’t done right.
Tax debt can get so bad, that individuals have been banned from traveling overseas until the debt has been completely paid off. To avoid this from happening to you there are a few things you can do.
 

Can You request An Extension?

 
The answer is – Yes. You can request an extension from the IRS, which will push your deadline further up, usually till as far front as October, even though they may be due in July. In the United States, the deadline for filing an extension is on the 15th of July of the tax year in question.
 
In cases where you don’t think you will be able to meet this deadline, you can easily request an extension which can be given for up to 3 months till 15th October. This is usually done directly via their website or you can go through a professional service such as Tax Desk who know the ropes and can help you every step of the way throughout the process until your clear and out of any owing. This is a good idea seeing as you will be filing your returns every year, if necessary, and don’t want to get it wrong more than once.
 

Can you Ask for A Payment Plan?

 
The answer is – Yes. The IRS offers the option of a payment plan for those who are so out of debt that they cannot pay it off at one go. Although this should always be the backup option because it is far better to pay off your debt via a balloon payment at one go. However, a payment plan, when needed, can be your saving grace.
 
How it works is through an agreement between you/your company and the IRS, they will give you an extended timeframe, if you qualify for the plan, which would typically be a short-term plan, they will get rid of the user fee usually associated with tax fees. The basic idea then will be to pay in installments however there will be a fee for it, depending on the plan you are put on.
 
We hope the above information gives you a good idea of what your solutions are if you ever end up in a similar situation. As they say, prevention is always better than cure!
 
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