Navigating the labyrinth of tax laws, deductions, and filing deadlines can be a daunting experience, even for those with a firm grasp of financial matters. As tax codes continually evolve, so do the potential pitfalls and opportunities for taxpayers, making it important to stay informed and proactive in addressing tax-related issues.
Whether you’ve missed a filing deadline, owe more than you can pay, or are dealing with penalties, it’s easy to feel overwhelmed. But don’t worry—you’re not alone. Millions of Americans face tax issues every year, and there are simple, proven solutions that can help you resolve your tax problems and regain your peace of mind.
How to Address the Most Common Tax Problems
Tip #1: Always File Unfiled Tax Returns
One of the most important things you can do to solve your tax problems is to file any unfiled tax returns. Not filing your tax returns can lead to severe consequences, including penalties and interest, liens, and even criminal charges. Filing your returns is the first step towards getting back on track and resolving your tax issues.
If you have several years of unfiled returns, start by gathering all the necessary documents like W-2s, 1099s, and any other income records. If you can’t find some of these documents, contact the IRS, and they can provide you with transcripts of your income records. Once you have all the necessary information, either consult a tax professional or use tax software to file your returns. Remember, it’s better late than never.
Tip #2: Negotiate an Offer in Compromise With the IRS
If you owe the IRS more than you can afford to pay, an Offer in Compromise (OIC) might be your best solution. An OIC is an agreement between you and the IRS that allows you to settle your tax debt for less than the full amount owed. This option is only available to taxpayers who can prove that paying their tax debt in full would cause financial hardship.
To apply for an OIC, you’ll need to submit an application along with financial documentation that supports your claim. Keep in mind that the IRS will thoroughly review your financial situation before accepting an OIC, so it’s crucial to provide accurate and complete information. A tax professional can help guide you through the process and increase your chances of success.
Tip #3: Establish an Installment Agreement
If you can’t pay your tax debt in full but can afford to make monthly payments, an installment agreement might be the right solution for you. With an installment agreement, you can pay off your tax debt over time, making it more manageable and reducing the financial strain.
To set up an installment agreement, you can apply online through the IRS website or fill out Form 9465 and mail it to the IRS. You’ll need to provide information about your income, expenses, and the amount you can afford to pay each month. Once your installment agreement is approved, you must make your monthly payments on time to avoid defaulting on the agreement and facing further penalties.
Tip #4: Consider a Partial Payment Installment Agreement
If you can’t afford to pay your full tax debt but can make some monthly payments, a Partial Payment Installment Agreement (PPIA) might be the right option for you. With a PPIA, you’ll make monthly payments towards your tax debt based on what you can afford. The remaining balance will be forgiven after a set period, typically between six and ten years.
To apply for a PPIA, you’ll need to submit financial documentation to the IRS demonstrating your inability to pay the full amount. As with an OIC, it’s a good idea to consult a tax professional to help you navigate the process and ensure your application is as strong as possible.
Tip #5: File for First-Time Penalty Abatement
If you’re facing penalties for not filing or paying your taxes on time, you may be eligible for First-Time Penalty Abatement (FTA). The FTA is a one-time waiver of specific penalties for taxpayers with a clean compliance history for the past three years.
To qualify, you must have filed all required returns, paid or arranged to pay any taxes due, and not have received any other penalty relief in the past. If you plan to request FTA, you can call the IRS directly or send a written request. Be sure to explain your situation and provide any supporting documentation that shows your compliance history.
The Bottom Line
Tax problems can feel overwhelming, but with the right approach and knowledge of the available options, you can successfully navigate the resolution process. Plus, by understanding your options and working with a tax professional, you gain better control of your financial health moving forward.
If you’re looking for the best tax attorney in New York, look no further than the Law Offices of Stephen B. Kass, P.C. With our unparalleled expertise, personalized service, and commitment to customer satisfaction, you can rest assured that you’ll get the best tax advice and representation available. Contact us today to learn how we can help you with your tax needs!
