Tax season got you down? If you’re reading this article, chances are the answer is yes. You’re not alone. With tax rates being one of the many everchanging constants business owners need to balance, even the most responsible businesses can get smacked with a tax bill they can’t afford. If that’s happened to you, here are the 4 steps you need to take.
Do not make the mistake of ignoring the problem. The IRS will not ‘go away’ if you don’t answer the phone and ignore the letterhead. Instead, your situation will worsen. Organize your tax returns and all of your financial records. Once you start contacting the IRS, you’ll realize that you need a form for nearly every request so it’s best to get the headache out of the way first. If you’re questioning whether or not you need it, you probably do.
Consider a Tax Attorney
If you didn’t use a professional tax preparer to file, you may want to consider working with a tax attorney to reduce the balance owed to the IRS. Tax attorneys are well versed in working with the IRS and can be a grand asset to settling your tax debt. Unlike a lot of institutions, the IRS is not always ‘right’. You cannot assume that what they are saying is correct nor should you accept a ‘fate’ without consulting a tax attorney. Sure, they’re not ‘out to get you’ but their claims are worth an investigation.
Choose the Right Payment Plan (or Debt Relief Program)
IRS balance reduction is possible. If you’re still set on handling your tax debt alone, make sure that you are selecting the right payment option for you. The IRS offers 72-month plans to pay off small debts like the $5,000 to $7,000 tax debts- but if your bill is much higher, you’re going to want to look at programs the IRS offers like the Fresh Start Initiative to avoid getting extreme tax liens on your home or vehicles.
Like most debt relief programs, start up with the IRS can be slow. In some cases, the Fresh Start Initiative can take 6 months to an entire year to be started. In which case, you’ll need to make sure that your finances are in order throughout the wait and well after.
Straighten Our Your Records and Make a Plan
With what you need to do handled, it’s time to start making a plan for how you will carry yourself through the tax plan. Start looking at your expenses and planning to make cuts. Ask yourself where you can improve cash flow or find more work. The quicker you pay off your debt, the better. Keep clean records. Document everything. Do not throw out receipts.
No ones plan to be behind on their tax debt. Sure, some people needed to plan better but life happens. Just because you owe money now doesn’t mean you can’t recover your life and your financial track record. Take this as a learning experience. Spend more time preparing for taxes throughout the year and consider saving more money.
How do you prepare for taxes throughout the year? Share your experience in the comments. When it comes to taxes, we could all use a hand.