How to Pay Back Taxes – Paying IRS Taxes Owed
Are you finally in a position where you can pay back taxes and get this off your mind once and for all? Good for you if you are ready to make your situation better. The only problem left is how you are going to pay your back taxes. In other words, you now know what you owe but you have to send payment to the IRS to finalize the process.
There are many ways to pay back taxes. Some of them may work for you, some of them may not. No matter what, you need to be sure that you are paying your back taxes in the way that is best for you from a financial point of view.
Ways to Pay Back Taxes:
- Lump Sum Tax Payment. This means that you are paying off your tax debt all at once. So if you owe $10k you will send payment for $10k and that will be that. If you can pay in full without adding too much stress to your life you should consider doing so.
- Pay in Monthly Installments to the IRS (Installment Agreement) Most people who owe back taxes are not ready to pay in one lump sum. This is why the IRS makes it simple to apply for a payment plan. This allows you to pay a certain amount of money on a monthly basis. It is the most common and affordable way to pay back taxes.
- Settle Your Back Taxes. If the two above options do not work for you, it is possible to settle taxes for less than the total amount owed. There are a couple ways to do this. The most commonly talked about method is an offer in compromise (OIC). An OIC has strict filing requirements and is difficult to obtain. Another method is a partial payment installment agreement which allows lower monthly payments than the normal installment agreement.
If you owe back taxes you should consider the above payment options. No matter how much you owe, one of the methods above should work for you.
Are you unsure of how to pay back taxes? Even after you consider these three payment methods you may still be confused. In this case you should hire a tax firm that specializes in back taxes and related issues. A tax professional can explain your options, assess your situation, and then help you decide how to pay your back taxes.
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