Can I File An Extension If I Owe Back Taxes
Yes, but it wont affect the taxes you owe. Asking for an extension to file your taxes means youll have six more months to prepare them. But if you owe money, the IRS immediately starts charging interest and potentially penalties after the filing deadline. Even if you cant file on time, you should estimate what you owe and pay what you can right away.
What Is An Injured Spouse
Like an innocent spouse, an injured spouse can request relief from some liability of the other spouse. In either case, there isnt a guarantee the IRS will agree to assign the responsibilities of the debt to the other spouse.
The main difference is that while innocent spouse relief is for something on the jointly filed return, injured spouse relief is for a past-due debt the other spouse owes. If the IRS has, or is expected to, apply the refund on the joint return to a spouses debt, the injured spouse may file Form 8379, Injured Spouse Allocation, to request their portion of the tax refund.
What Is Tax Debt
When you forget to pay or file your taxes, there is a mistake on your taxes, or the IRS wants to change your taxes, and the IRS says you owe money as a result, youve incurred tax debt.If you have tax debt and youre worried about owing money to the IRS, youre not alone. In 2017, around 858,000 American taxpayers had delinquent accounts. Fortunately, the IRS provides options for taxpayers to resolve their debt. There are many options to help reduce, and in some cases eliminate, tax arrears, ranging from filing or correcting a tax return to arrangements like penalty abatement, installment agreements, or offers in compromise.
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How To Apply For Cnc Qualification
Achieving currently not collectible status can be more difficult than securing an offer in compromise. Youll almost certainly need the help of a professional. Consider visiting a taxpayer clinic if you cant afford to pay for services.
Youll have to provide a complete and accurate picture of your current finances, as well as your assets, for CNC qualification. Youll most likely have to establish that you could not qualify for a loan to pay your debt, and that you had no assets you could sell to come up with the money.
The IRS may require you complete and submit Form 433-F, the Collection Information Statement, detailing your financial picture.
The Statute Of Limitations On Tax Debt
Your annual tax payments are due on the Tax Day filing deadline, which is usually on or near April 15.
When the IRS has accepted your return and has effectively recorded the balance you owe, your tax debt has been assessed. The IRS then has up to three years after accepting your return to assess the tax owed. Under most circumstances, it has 10 years from the assessment date to try to collect from you.
The IRS might suspend the 10-year period in some circumstances, but then the time of suspension would be added to the end of the 10-year term. That statute of limitations generally begins when you file a return for that year.
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Need Help Speak To An Expert Tax Attorney Or Check Out Our Help Guide
If you are looking for help to resolve your own IRS debt case, schedule a consultation with one of our expert tax attorneys by or calling .
If you are doing your case on your own, check out our free tax relief help guide. You can also ask a question below by posting a comment or post a comment on one of the videos on our YouTube channel and well do our best to assist you.
What Other Options Are There
There are several. One is to have a tax relief professional negotiate with the IRS a potential reduction in the total tax debt. Another is to have that tax expert establish with the IRS an installment payment plan that is financially feasible and that takes advantage of the CSED. A third is to have the tax relief professional present a hardship case to the IRS. During that process, a tax professional can request that the IRS stop collection procedures ranging from liens on property to garnishment of wages. Being in debt to the IRS does not mean being in continual financial distress. There are proven ways to manage IRS tax debt. However, a common error for those unable or unwilling to pay their taxes is to simply do nothing. Research and experience both show people who consult with a tax relief expert early on have fewer financial, business and personal repercussions. Fortunately, most tax relief professionals like Landmark Tax Group provide confidential consultations prior to full-on representation. During the consultation, a tax debtor and tax professional can together understand the scope of the tax problem, discuss the precise options available, and determine how to best resolve the matter together.
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When To Consider The Debt Forgiveness Program
Are you facing multiple tax problems? Have you accumulated a significant tax debt that you cant pay off in one lump sum?
Its time to consider a debt forgiveness program offered by the IRS. Its important to note, though, that the IRS will take a very good look at your finances before accepting you into the program. They wont extend any relief options to you if they believe you can pay off your debt.
What Is The Fresh Start Irs Debt Forgiveness Program
The Fresh Start IRS Program includes all of the tax debt forgiveness options listed above. It creates a simple, streamlined way for taxpayers to apply for IRS debt relief. When a taxpayer is approved for a Fresh Start and demonstrates good faith in adhering to the terms of their agreement, they can even have tax liens and other penalties removed.
Hiring A Tax Relief Company
Prefer not to navigate the unpaid tax debt maze on your own? You can hire a reputable tax relief company, like Larson Tax Relief, to do the work for you. Their team of seasoned professionals can evaluate your situation and identify a program under the Fresh Start Initiative thats most suitable for you.
Larson Tax Relief is accredited by the Better Business Bureau with an A+ rating and has over 18,000 satisfied clients to date. The team has an exceptional track record of helping clients resolve tax issues that make it hard to get ahead financially. Theyve also helped thousands of clients secure OICs and fair installment agreements with the IRS.
Learn more about how they can help you resolve your tax debt by calling 833-833-4151 or completing the online form. Consultations are free, and theres no obligation to move forward with a recommended course of action.
Options For Taxpayers With Debt
Taxpayers have several options for settling their debt with the IRS, each with different terms and consequences. For example, you might qualify for penalty relief, or a reduction in the penalty fees and related interest, if you made a concerted effort to comply with the law but you couldnt meet your obligations.
Other options for settling debts include:
- The IRS Fresh Start program: The IRS Fresh Start program includes several forgiveness and relief programs offered by the IRS.
- IRS installment agreements: The IRS will let you enter into a short- and long-term installment agreement that will allow you to pay off your tax debt over time.
- Offer in Compromise : The IRS will accept less than what you owe in some circumstances, so youre off the hook for paying the entire balance.
- Currently Not Collectible: The government recognizes that theres very little chance it can collect from youat least at this point in timeso it ceases and desists with collection efforts. But this option may not make your debt go away for all time.
- Innocent Spouse Relief: The IRS will relieve you of responsibility for paying the resulting debt under some circumstances related to filing a joint tax return with your spouse.
Lets learn about these debt settlement options in more detail.
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Is There A Minimum Monthly Payment For An Installment Plan
Your minimum monthly payment depends on what you owe and the type of payment plan you request. The IRS has two categories of payment plans:
- Simple payment plans
- Ability-to-pay payment plans .
Simple payment plans have minimum payment amounts. Ability-to-pay payment plans are based on an analysis of your ability to pay your tax bill with your assets, income, and allowable expenses.
At A Glance: Conditions For Discharging Tax Debt
To discharge tax debt through bankruptcy, these requirements must be met:
- It must be income tax debt
- It must be debt thats three years old or older
- You must have filed a valid tax return for the debt two years before filing for bankruptcy
- The IRS must have recorded the debt at least 240 days before you file bankruptcy
- You must have filed your returns honestlyno tax evasion or fraudulent returns
- The IRS must not have filed a tax lien on your assets
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Irs Tax Debt Forgiveness: Irs Payment Plans / Installment Agreements
An IRS installment agreement is a payment plan in which an individual with back taxes makes fixed regular payments, usually monthly, toward their tax debt rather than paying it all at once. IRS payment plans are popular among taxpayers who can pay what they owe the IRS over time but not in one lump sum. The monthly payment amount in an IRS installment agreement is determined by the total tax debt amount as well as the taxpayers income and other financial obligations.
How To Apply For An Offer In Compromise
You can apply online using Form 433-A or form 433-B for businesses. Youll also need form 656 for individual and business tax debt, as well as a $205 nonrefundable application fee. Finally, youll need to make an initial payment toward your debt.
The initial payment will vary depending on your offer and payment option. For a lump-sum cash payment, youll need to submit an initial payment of 20% of your total offer amount. For periodic payments, youll need to submit the first payment. These payments will be applied to your balance.
The IRS will suspend most collection activities while it evaluates your situation, although it may still file a Notice of Federal Tax Lien to secure its rights to collect from you if your offer is denied. The lien will be released when youve paid off the agreed-upon amount.
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What Is A First
If this is the first time youve owed the IRS money, you can request a first-time abatement . If you prove to the IRS this is the first time you have been in a non-payment status on taxes, you can request an abatement of tax-related penalties for one tax period. You must show you previously didnt have to file a return, or you filed and paid your previous taxes and have a three-year history of no penalties. To demonstrate filing compliance, you must have filed, or filed an extension for, all of your tax returns you cant have an outstanding request from the IRS for a return you didnt file. The same goes for payment compliance: You must have paid, or made arrangements to pay, any tax you owe. You can be on a current installment agreement with the IRS, meaning your payments are up-to-date. Keep in mind that first-time abatement is a one-time offer. If youve already used FTA, then you would need to look toward a reasonable cause penalty abatement.
Does The Irs Have A Debt Forgiveness Program
Banks Editorial Team
Banks Editorial Team
Are you facing a tax bill you cant afford to pay? Although the IRS does not offer a debt forgiveness program per se, other alternatives may help you pay the taxes you owe.
Read on to learn more about what happens if you owe tax debt, how to find relief and why you may want to consider hiring a tax relief firm.
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Is It Possible To Be Penalized For Using The Irs Debt Forgiveness Program
Many taxpayers avoid contacting the IRS for help with their debts because they fear they will be penalized when they come to terms with the bad financial situation that has led them to default on their tax obligations. This belief is false. The IRS does not penalize any taxpayer for requesting help or using one of the debt forgiveness program options.
Can I Reverse Or Remove A Tax Levy
You can contact the IRS and request a levy release. The IRS can release a levy if it is causing immediate economic hardship. The IRS will weigh all facts and circumstances to decide if a levy can be released. Often this includes setting up a payment plan for the taxes you owe. The removal of a levy doesnt mean you dont have to pay your tax debt. You must still make arrangements with the IRS to resolve it, or a levy may be reissued. However, if the levy is based on incorrect tax information, you may be able to reduce, even eliminate, the taxes owed. If you have unique circumstances, such as special regular medical expenses, the IRS can take that into consideration and reduce, or eliminate, the amount of the levy.
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How Does The Forgiveness Plan Work
You will need to apply for tax debt relief and be accepted into an IRS debt forgiveness program. You must then agree to the terms of your IRS debt forgiveness program. In order to monitor your tax debt forgiveness, the IRS will continually assess your financial situation. You will be given an IRS debt forgiveness payment plan to pay off the full or amended amount in a lump sum or installments.
How Can I Get A Tax Lien Removed
The IRS will work with a taxpayer to ensure any tax debt is reasonably satisfied. Here are some of the ways to reduce the impact of a tax lien:
- Payment If you pay your tax debt in full, the IRS releases your lien within 30 days of payment.
- Subordination This option doesnt remove the lien, but it does allow other creditors to move ahead of the IRS debt.
- Withdrawal This option removes the public notice so other creditors are not competing with the IRS for your property. You still owe the debt.
- Discharge of Property This option removes the lien from specific property based on the Internal Revenue Code used to determine eligibility.
- Certain Installment Agreements Under this option, the public notice may be removed if you:
- Owe $25,000 or less
- Have a direct debit installment agreement that fully pays your tax debt by the earlier of 60 days or before the collection statute expires
- Have made three consecutive direct debit payments
- Have not defaulted on your current, or any past, direct debit installment agreement
- Are fully compliant with other filing and payment requirements
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Irs Tax Debt Relief: Forgiveness On Taxes
Get a Free IRS Tax Debt Relief Consultation by one of our Tax Professionals
IRS tax debt relief or forgiveness allows taxpayers who owe unpaid taxes to reduce part of their debt, according to their circumstances. While tax debt relief is fairly rare, its not impossible, and each individual case needs to be assessed by a professional to determine whether the person is eligible. The government also has an IRS debt forgiveness program in place which offers several tax relief options. The IRS debt forgiveness program was set up to help taxpayers with the complex process of tax debt forgiveness and to organize an appropriate debt repayment plan. Here is a quick overview of IRS debt forgiveness.
Tax Faqs: When Can You Use Irs One Time Forgiveness
If you feel you have been blindsided by a penalty from the IRS and you are unable to pay based on circumstances beyond your control, you may qualify for IRS one-time forgiveness. Despite the agencys reputation, the IRS often works with taxpayers in disadvantageous circumstances to alleviate undue tax burdens. There are three primary types of relief offered by the IRS: reasonable cause, administrative wavier and first-time penalty abatement, and statutory exception.
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Administrative Waiver And First Time Penalty Abatement
The first time penalty abatement policy is in place for taxpayers who experienced an unprecedented disruption in their tax situation which brought unpredictable tax debts to the fore. To qualify for relief based on this policy, you must have not been previously required to file a return or have not incurred a penalty in the last three years, have filed all presently required returns have, and have paid or arranged to pay any debts to the IRS.
In plain English, this means if you have been in good standing with the IRS and rectified any issues that previously arose, the IRS will be willing to work with you to find a solution to an unlikely problem.
For example, if your uncle passed away, left you $100,000 in his will, and mandated a massive funeral described in that same will, you would have to claim that $100,000 as income and pay for your uncles lavish funeral, rendering you incapable of paying the tax burden on the $100,000 in income. The IRS takes these circumstances into account provided you can furnish the documentation.
Pay When You Are Able