This year, you worked hard to provide for your family. As an independent contractor, you were proud that you were able to earn the kind of income you wanted in your own time and on your own schedule.
When tax time came around, you were shocked by what you found you owed. It was almost 30% of what you’d brought in. How could that be possible?
If there are questions about your taxes that you have or you’re worried that you won’t be able to pay your tax bill, you may want to speak with your attorney about the options that are open to you. One excellent offer for some people is a settlement offer. Another is an installment payment plan.
What is a tax settlement offer?
When you put together your tax forms, you may see that you owe more than you can pay. If that’s the case, you should submit the tax forms before offering a settlement to the Internal Revenue Service. The IRS is able to consider a settlement offer only after you submit your tax return to them. You can make payments that apply toward this settlement over time. On the IRS’s website, there is a tool to see if you qualify. Your attorney can help you review the information you have and help you decide if you’ll be able to prequalify or not.
What is an installment plan?
An alternative to settling for less than you owe is to pursue an installment plan. With an installment plan, you’ll be able to pay what you owe in monthly installments until the taxes are paid in full.
An installment plan is a payment plan. You should expect to pay additional fees and interest if you choose to use an installment plan, too. The IRS currently offers three options for making payments including paying now, a short-term payment plan and a long-term payment plan, which is the installment agreement.
The benefit of an installment plan is that you can negotiate an amount to pay monthly that you can afford. Additionally, the money can be taken from your account through direct debit, so you don’t have to worry about missing payments. You do have the option of paying through other methods, though, depending on how much money you owe to the IRS.
Either of these could be a good option for you. Take some time to learn more before you decide what you’d like to do.