How to avoid back taxes?

How to avoid back taxes?

What are back taxes?

Back taxes are that you owe that remain unpaid after the year they are due. Generally if you allow to an whole filing year go by without paying the Internal Revenue System ( IRS) what you owe, then it called back taxes. Even taxes you do not pay within a specific filling year already incur interest and penalties. As a matter of fact penalties and interest are applied if you file an extension. IRS does not wait to act if you don't pay on time.

Here are some tips on how to avoid back taxes: Offers in compromise You might be able to get tax relief through offer in compromise. It allows you to settle your back taxes with the IRS for less than you owe.

This is may be an option if you can't pay tax debt or if doing so makes a financial hardship' according to the internal revenue system.

However it is much harder to find the IRS to sign off on an provide in compromise lesser than half the requests. One must explore other options prior to turning to an offer in compromise.

Must set up an installment agreement The most common way to pay back taxes is Installment agreement. One can use an installment agreement to pay back one or more years of the back taxes in a single plan. Also the total amount of taxes you owe is divided into monthly payments set over a certain time period. One can negotiate with the IRS to find out how much he or she can afford to pay monthly.

Ask fir penalty abatement If anyone has a good reason on why he did not filed or did not pay what he owed when he filed, that person can apply for penalty abatement. It does nit minimize the penalties applied to that debt. The internal revenue system will reduce or they can remove penalties if approved for penalty abatement. For approval, one need to prove that he had reasonable cause not to pay or file on time. Remember not having income available does not count and one has to go through a key event such as a natural disaster. Furthermore, tax relief service firms usually provide to help taxpayers in distress and some firms can be helpful if you are confused about the filling process or you need help filing tax forms . But you need to keep some important things in mind:

The internal revenue system rejects most of the applications for offers in compromise.

If a tax service provider loses or delays any application, then the person is still on the hook for his tax debt, penalties and interest with the IRS. For mire information on federal tax for non residents, visit IRS website

Do not ignore the problem because the IRS will not. If any person can't pay what his owe, file your return on time of file for an extension if that is not possible. Keep in mind that the late filling penalty is 5% of the tax owed per month up to a maximum of 25% of the balance. Also there is an underpayment penalty of 0.5% to 1% per month of the balance owed, up to 25% too. Your tax debt will grow fast if you don't file return or make any payment on obligation.

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