Today, Optima Tax Relief Lead Tax Attorney, Phil, gives his insights on the best way to pay off tax debt.
Withhold the Correct Amount
Ensure your employer withholds the correct amount of federal income tax from your paycheck based on your Form W-4. If you’re self-employed, be sure to use Form 1040-ES to make estimated tax payments quarterly to cover your income tax and self-employment tax obligations. Mark the quarterly tax payments on your calendar to avoid penalties and interest: April 15, June 15, September 15, and January 15 of the following year.
Pay Your Tax Bill in Full When Due
Avoid penalties and interest by paying your entire tax bill by the due date, typically April 15 for individual income tax returns. Use direct payment from your bank account via IRS Direct Pay, debit or credit card payments, or electronic funds withdrawal when e-filing.
Request an Installment Agreement
If you can’t pay your tax bill in full, request an installment agreement from the IRS by applying online using the IRS Online Payment Agreement tool or by submitting Form 9465, Installment Agreement Request. Depending on your financial situation, you can negotiate monthly payments over a period of time.
Apply for Hardship Programs
If you’re experiencing financial hardship, consider options like an Offer in Compromise (OIC), which allows you to settle your tax debt for less than the full amount owed. Be sure to provide detailed financial information to demonstrate inability to pay or prove that paying would create significant economic hardship.
If you need tax help, contact us today for a Free Consultation.