Posted: Sarah Nieschalk | May 23, 2016

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Protecting Your Money When a Tax Debt is Due

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Regardless of how much money you're earning each year, you no doubt want to keep every dollar you can. This can be a challenge in itself, as you weigh a long list of financial responsibilities against your saving strategy. The addition of a tax debt can only exasperate any hope you have of making any meaningful progress with your money.
While you have to address any IRS issue in earnest, you also want to do everything in your power to safeguard your income. There are a few smart moves you can make to ensure a swift solution to your tax trouble, regardless of how much you owe. Being proactive with you tax resolution will be far better for your money in the long run.

Don't Go Cheap On Your Taxes

If you have experience handling your own taxes, you may be perfectly capable of correctly filing your return each year. Alternatively, if you're unsure of what you're doing or frequently make mistakes, consider enlisting a tax preparer to help. While there will be a minor cost for this service, it will be far more cost effective than paying for a mistake later on. Remember, errors on your return can ultimately lead to an IRS assessment of debt. If the unthinkable happens, prepare to handle it, but don't take your eyes off of your bank account.

Determine a Resolution Early On

The best thing you can do for your money, particularly if you're on a tight budget, is to address any tax issue with haste. Once you're notified of a tax debt, you'll want to satisfy it as quickly as possible. By doing this, you'll ultimately pay less in penalties and interest, which accrue on a monthly basis. If you do require more time to pay your balance, you can request an installment agreement with the IRS; or better yet, allow a licensed tax professional to negotiate the lowest monthly payment allowable by law.

Understand All of Your Options

There is typically no one way to address an IRS issue. There are, however, a number of sound tax resolutions to consider when you're staring down the barrel of a tax debt. Sorting out all of these options can difficult, especially under the time constraints imposed by the IRS. Here again, a licensed tax professional can be instrumental in helping you determine the most efficient way forward and - you guessed it - saving as much of your money as possible.

Consider the Consequences

Time is of the essence when handling any delinquent tax balance, and not just because of the interest and penalties. The longer you wait to resolve your tax debt, the more likely you will face IRS collection action. These measures may include a bank levy or wage garnishment, which can devastate your finances. You can ensure that neither of these steps are taken by securing a tax resolution early on. In the event that you're already facing aggressive collection efforts as a result of a tax debt, don't waste any time in contacting a tax resolution company. Your money might just depend on a tax professional entering the fray and bringing your tax problem to a swift end.

 

<--Back to Debt Blog                        Next Post: Tax Questions You May Be Afraid To Ask -->

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Written by Sarah Nieschalk

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