Paying Back Unpaid Taxes in Installments
When you are paying back unpaid taxes in installments there are a few very important things you must know about the process.
Once you understand how paying back unpaid taxes in installments works, you may wish to find another option. However, if this is the only way you can pay your debt back, you need to understand the system.
First thing you need to know about paying back taxes in installments is that the IRS will charge you an account set up fee. This fee must be paid in full with your first payment. If you do not pay this account set up fee they will not take payments from you on your taxes. While the price is subject to change, on average this amount is about $200.00.
The amount that you owe will continue to generate interest, even while you pay. This means that if you make an arrangement for a price that is too low, you will not make a dent in the debt. In actuality you will be creating a larger debt. You must make a payment that will cover that month’s interest and penalty fee and still apply a considerable amount to your balance.
Payments are applied to the oldest debt first. For instance, if you owe payroll taxes for two years, the oldest debt will be paid first, even if it is a smaller debt. While this may not seem to be a large issue, the larger debt is generating more interest.
Another thing you should realize about paying back taxes in installments is that you will forfeit any and all tax returns until the debt is repaid. You should not plan on a refund at the end of the year, at all, unless you can prove how this will hurt you. The only way that the IRS will allow this is if your spouse has no connection to the debt and their money is being claimed to pay towards the debt. Then, and only then, will they adjust the refund and provide your spouse with their share.
Finally, if you feel that you are being overcharged and that the debt is not yours, you should consult a professional to help you make your claim against the IRS. Many people have found that once they enlist professional services they can reduce their debt if not eradicate it altogether.You CAN get out of debt for the upcoming year. With the help of Debt Goal, you can reduce your payments and start paying off debt.
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