Do you owe a lot in back taxes? Are you nervous that the IRS or the state will take all your money and leave you with nothing for expenses like food, housing, cars, insurance, etc.?
Tax resolution or tax debt settlement can be confusing topics that often seem overwhelming to the person with delinquent tax debt. The first thing I like to say to everyone though is: It doesn’t matter where you are in the process, hiding under a rock from the IRS and/or the state or just missing your taxes recently or just wanting to get rid of this burden. your shoulders, relax.
So relax… Did you know that the IRS and/or the state cannot accept more money than you can pay? What is the definition of what you can afford? Each taxing authority defines this slightly differently, but the general principles are the same for the IRS and all states. You must be allowed to pay for housing, food, medicine, cars, insurance, etc. These costs are classified as your “allowable living expenses.”
Your income minus your allowable living expenses will give you the amount of money that the IRS and/or the state can claim, also known as disposable income. Your goal is to reduce your disposable income to the lowest amount possible, thereby reducing the amount you will need to pay back. If you don’t have any disposable income, then the IRS and/or the state can’t keep any of your income. The key is: let them know you don’t have any disposable income. Do this by completing the correct forms and using the IRS and/or state payment calculations.
While the amount you owe plays a role in how much you have to pay, it plays less of a role than what you can afford. The United States has laws and you have rights that protect you from paying more of your delinquent tax debt than you can afford. Again, minimize your disposable income and minimize your refund.
The IRS or the state can also force you to liquidate assets. They typically won’t ask you to sell the family home or family car, but if you own other types of assets (non-owner-occupied real estate, boats, RVs, etc.), the IRS will want the equity in These articles. If you can prove to the IRS that these assets do not have capital, you need that asset to work or you can make monthly payments on your tax bill that will allow you to pay off your balance in full within the allotted time. , many times you will be allowed to keep that asset.
