As most of my readers already know, I am currently negotiating tax debt, lots of it. There are many reasons why this has come to be and anyone with tax debt mostly likely has there own unique story. For me, it was a 4-year period rife with troubled marriage, getting laid off, self-employment, ugly divorce, nasty custody battle, cross-country relocation, new job, living alone for the first time, bicoastal parenting, depression, dating in your 40s, getting fired, unemployment, heartbreak, another relocation, and most relevant, not filing my taxes.
Negotiating Tax Debt With the IRS
10. Filing an extension seems to be completely OK, as long as you request one. Use a 4868 form. An extension gives you an additional 6 months to file which can be helpful. But be forewarned, time flies. Don’t forget to file by the extension date in mid-October.
9. If you get a letter from the IRS, read it. This seemingly simple advice comes straight from a former boyfriend who worked at the NY State Department of Taxation. The notices are often lengthy, intimidating, and not exactly user friendly. However, they really are full of important information and next steps. Grab a highlighter, a glass of wine, and go slow.
8. Wear your Patience Pants and a Southern Smile when you call. Hold times can be lengthy. Some systems have that handy-dandy “we will call you back” feature but mostly its the usual torture of Muzac and encouragements to “visit their website at….”. Be nice and honest. (My ex also suggested that if you find yourself up against a “difficult” call center representative, or aren’t getting the results you want, politely end the call and call back. Odds are the next rep will be more helpful.)
7. Date a guy that knows his shit about taxes. Not a feasible option? OK, then do your research. The IRS website is robust. Important forms and instructions are downloadable. Help topics are searchable. If you need information, you can probably find it there.
6. Payment arrangements are surprisingly easy to request and arrange. There is even an online request form now. If you owe more than you can pay in one chunk, request an installment agreement ASAP. Stick to those payments. If you skip a payment, you may break the agreement and then owe it all.
5. Penalties and interest are a bitch. I’m going to cover these in detail in an upcoming post. If you file late, bam. Penalty. If you carry a balance. Bam. Interest. Granted, it’s not the interest rape of modern-day credit cards but it can rack up. Be aggressive with any payment agreements to avoid too much interest.
4. Liens and levies suck. Again, I’ll cover these “big bads” in detail in a future post but know that the Feds can and will take the money they are owed. They can garnish your wages, seize bank accounts, etc. And that becomes a HUGE mess. Don’t let it get to that.
3. Own your shit. Take responsibility for any mess you might be in. If you admit it’s your problem, you empower yourself to find the answers. I’m not asking you to love your debt but pull up your big-girl panties and might it right.
2. Get professional help. I’ve done my taxes by hand. I have also used Turbo Tax. I’ve even hired professionals. And quite honestly, with tax laws being so freakin’ complex and ever-changing, an experienced, respected, and trusted tax professional is really the only way to go, in my opinion. Find someone you have a rapport with and stick to them like glue.
1. File your damn taxes. Seriously. It’s just too costly on your conscience and your wallet. Tax returns are due Tuesday, April 18, 2017.