Did you know that Americans owe a total of $114 billion in tax debt? If you’re one of them, you know that finding ways to repay what you owe isn’t just smart—it’s essential if you want to get the IRS off your back.
But finding ways to repay your debt when you can’t afford to make a lump sum payment can seem overwhelming.
There are a few things you can do to get your debt under control and start making payments. Here are a few proven ways to help you settle your debt fast.
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Ask for a Payment Plan
The IRS wants you to pay the taxes that you owe, and they’re willing to do whatever they can to get that money from you. However, that doesn’t mean you have to come up with the full amount all at once. Instead, you may be able to apply for a payment plan.
These repayment plans allow you to pay your owed taxes in installments rather than forcing you to pay upfront. Keep in mind that the terms of the repayment plan will vary based on how much you owe.
The more you owe, the shorter your repayment term will be.
Take Out a Loan
If you can’t pay your income tax debt in full, one of the easiest things you can do is apply for a personal loan to help cover what you owe. When looking at different loan options, pay attention to the interest rate for each loan and any origination fees the lender may charge.
As a general rule, you’ll want to choose a loan that offers the lowest interest rate and lowest fee schedule.
Keep in mind that you may not qualify for a large enough loan to cover your full tax debt balance. If this is the case, you may still need to request a repayment plan to settle your debt.
Work With a Tax Debt Relief Professional
If you owe more than you’re comfortable repaying or feel that a repayment plan may put too much strain on your monthly budget, consult with a tax debt relief professional. These experts may be able to negotiate with the IRS on your behalf to lower your total debt.
Even better, they may be able to identify errors on your returns that could contribute to a higher-than-necessary debt balance.
Though you’ll pay for these services, they can significantly reduce your debt. Learn more here about how they can help simplify your debt repayment process.
Paying off Tax Debt Is Possible
Though paying off tax debt can take time, it’s doable. The key to successfully paying off what you owe lies in choosing affordable ways to pay down your debt as fast as possible.
Consider using the methods described above to help you get out of debt fast. Once you’re out of debt, you can focus on paying your future taxes on time.
Not sure how to stay on top of your taxes each year? Check out our latest posts for more tax filing tips and tricks.