Tax settlements can be overwhelming and complex. A tax settlement is an agreement with the Internal Revenue Service (IRS) that allows you to pay less than what you owe in taxes. Settlements can be structured in a variety of ways and can provide significant savings if you are unable to pay your debt in full.
Finding yourself in this situation and not knowing where to begin or what steps to take can be difficult. It’s important to take the time to understand the process and make sure that you are using the right strategies when dealing with them. Here are five tips to help you navigate the tax settlement process and maximize your chances of success:
1. Take a Close Look at Your Finances
Before you even consider tax settlement, it is important to take an honest look at your finances and assess exactly how much money you have available to put towards a settlement. Consider all of your debts, income and assets in order to get an accurate picture of your financial situation. Be honest with yourself and with the IRS and come up with a realistic estimate.
2. Get Professional Help
When dealing with tax settlement, it is highly recommended to get professional help. A tax attorney or CPA can provide valuable advice and guidance throughout the process as well as help you negotiate with the IRS. They will have experience navigating the grittier details and knowledge on what laws your particular case fall under, which will inevitably help you achieve the best outcome.
3. Review Your Options
There are a variety of options available when it comes to tax settlement including Offer in Compromise, Partial Payment Installment Agreement and Penalty Abatement. Knowing which option to choose can require particular knowledge and insight. An experienced tax professional can help you determine which option is the best for your particular situation.
4. Read the Fine Print
Before agreeing to any terms with the IRS, it is important to read through all of the fine print and understand exactly what you are getting yourself into. Make sure you are comfortable with the terms of your settlement before signing any documents. This is another area a professional would be able to help you navigate and understand, to make sure that the agreement you enter into is, in fact, what you believe it to be.
5. Keep Up With Payments
One of the most important tips for tax settlement is to stay current on payments and keep up with all filing deadlines in order to avoid further penalties or interest charges. Also, make sure that you follow through with all agreed upon terms in order to avoid any problems in the future. Negating the terms of a tax settlement can do far greater damage than the original debt could have. So when settling, make sure that the terms of the agreement are manageable for you long term.
A tax settlement is a lot to navigate, but following these tips can help you make the best of your tax settlement and come out on top in this tricky situation. Be sure to consult a professional for advice throughout the process to ensure that you are making smart decisions with your finances. Good luck!