By: Mevish Jaffer
The Trouble with Tax Debt
Many people today are facing the financial challenges that go along with being in debt. Yet, with all the ways you can be in debt in this day and age, tax debt is perhaps the worse kind! Additionally, by the time penalties are added on to your accrued taxes, you’re pretty much caught in a financially sticky situation. So what kinds of mitigating circumstances can lead you to tax debt in the first place? Tax debt generally stems from financial difficulties involved with situations such as:
- Extended periods of unemployment
- Layoffs at work
- Medical related problems
- Accidents
- Marital crisis (separation or divorce)
Tax Debt Relief Tips
It’s easy to feel extremely overwhelmed when you’re burdened with tax debt; however the key is to remain positive, keep an open mind and basically not be defeated. There are also several tax debt payment options you can choose from to help you become debt free or at least lessen your financial load.
Tax Debt Attorney: One option you can consider is consulting with a tax debt attorney. You may not be big on seeking legal counseling, but this is where keeping an open mind comes into play. A tax debt attorney can offer you some valuable advice and represent you in court. Just bear in mind that tax debt attorneys are experts who can help you to figure out the best course of action in dealing with your tax debt. They also have the ability to engage in negotiations with the IRS which can result in some sort of tax debt relief for you.
Home Equity: You can also use the equity from your home (if you have enough) to apply for an equity line of credit or home equity loan. If you are not sure the amount of equity you have in your home or how much you should borrow, use mortgage calculators online to easily find out. The funds you attain can be used to pay for your tax debt, including accrued penalty fees.
Garage Sale: You’re probably thinking that the only cost a garage sale will cover is dinner and perhaps dessert, however you may be wrong! There is absolutely no telling how much money you can make when you sell some of your old valuables. While you are not guaranteed to turn over full tax debt coverage, it’s worth a shot to make some extra money that will no doubt be of help. Don’t forget that one person’s junk may be another person’s treasurer!
Go Straight to the Source – IRS: Since it’s the IRS that demands you settle your tax debt, it only makes sense to confer with them to try and work out a resolution. This is where being positive comes in handy, the IRS forms and services might just work out a repayment plan that will help you pay off your debt.
Admit Defeat: Always remember that "blood is thicker than water." As hard as it may be to do, you can always turn to family and close friends for help. It may be embarrassing and perhaps even a little uncomfortable, but think about this way; in times of financial crisis, if you can’t count on your family and friends, then who can you count on?
If you’re desperately seeking relief from your tax debt, then the first step is to decide on an appropriate plan of action that will help you get there.
