Having a tax debt of over $10,000 can be stressful. But the worst thing you can do is ignore the issue and hope it goes away. It won’t!
By putting things off, you risk owing even more due to additional penalties and interest charges.
The good news is that you have options for dealing with the situation. Below, we’ll outline some steps to take if you have a tax debt of over $10,000. By following these steps and seeking the help of a financial professional or tax advisor, you can effectively manage your tax debt and work towards a resolution.
Step 1: Assess your financial situation
The first step is to figure out how much tax you owe. And keep in mind this amount will include unpaid taxes, plus penalties and interest charges. When you owe back taxes, you should receive info from the IRS about how much you owe. If not, you can contact them to get the current amount.
Besides figuring out how much you own, you’ll also want to assess your current financial situation. Get an up-to-date accounting of your income, expenses, assets, and other debts.
You may want to get help from a financial advisor, tax professional, or tax debt specialist to help with this process.
Step 2: Explore your payment options
If possible, try to pay the debt in full. This way, you’ll avoid adding more penalties or interest to your total. Also, you can put the stress of things behind you. If you can’t pay in full, look at setting up a payment plan with the IRS.
You can also try to negotiate a settlement with the IRS or seek relief through the Offer in Compromise program, which allows taxpayers to settle their debt for less than the full amount owed.
Again, you may want the help of a professional here to help with any negotiations.
Step 3: Take care of your current tax obligations
Even if you already own taxes, make sure you file all your tax returns on time, even if you can’t pay the taxes owed.
If you can’t pay in full, then at least try to make partial payments to minimize interest and penalties.
Step 4: Protect your assets
The IRS can seize assets to pay off a tax debt. But there are things you can do to protect your assets.
Some ways people suggest doing this is to transfer ownership of your assets or get the IRS to claim certain assets as exempt.
There are other options, but this can be a very dangerous game to play, so you want to be really careful here.
The best advice here is to consult with a trustworthy tax professional or attorney to determine the best course of action for your situation.
Bottom Line
Dealing with a tax debt of over $10,000 can be overwhelming, but taking action and exploring all of your options can help you find a solution that works for you.
