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I owe back taxes

Do you owe back taxes? The answer is simple, and you probably already know it: pay up as soon as you can. Don’t have the money? Don’t worry; you’ve still got options.

Borrow money

If you owe back taxes, the IRS will charge you both interest and penalties for each day that you haven’t paid your debt. Consider taking out a bank or a credit card loan to pay it off—you’ll still be paying interest, but you won’t have to deal with the penalties.

Offer in compromise

An offer in compromise (OIC) is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax debt. If you can get an OIC, that’s great—but keep in mind that the IRS resolves less than one percent of its balance due accounts through the OIC program. And watch out for con artists who offer to file an OIC application on your behalf in exchange for a fee. Chances are, they won’t be able to deliver on their promises, and you’ll be left owing even more money.

Payment plan

Payment plans may sound like a good idea; after all, you’ll be making smaller, more manageable payments that are based on the amount that you owe. But the IRS will still charge you both interest and penalties, so you’ll actually end up paying a lot more. If you pay off your tax debt quickly as possible, you can save thousands of dollars.

Want more information on back tax payment options? Call me for a free consultation.