Now You Owe the IRS On Top of Everything Else: Prioritizing Your Debts to Get Out of the Hole

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Financial catastrophes are often far more complicated than they seem at first glance. Tax debt, for example, rarely occurs in a vacuum.

If you’re behind on your taxes, you’re likely already dealing with other issues such as multiple forms of debt. Prioritizing can feel overwhelming, but your situation is far from hopeless.

Follow these simple steps to get a handle on your debt situation:

Look at Interest Rates and Penalties

Which form of debt will be the most costly if you neglect to pay it off? Which creditors offer reasonable interest rates? Examine these financial factors to determine which approach will be best for your bottom line. Keep in mind that the IRS assesses both interest and failure to pay penalties.

Consider Your Payment Options

Some creditors offer better payment solutions than others. The IRS, for example, provides several programs that can be surprisingly favorable.

Depending on your situation, you could qualify for an installment agreement or even an offer in compromise. Take a close look at these solutions and don’t hesitate to ask a tax expert for insight. From there, you can compare and contrast various payment plans.

Determine the Consequences

What’s the worst that could happen if you fall behind on a specific type of debt? Chances are, certain creditors will treat you worse than others.

Unfortunately, the IRS can be a particularly problematic adversary, as it holds more power than most creditors. Potential consequences could include garnished wages, forfeiting future refunds, or even the loss of personal property. Weigh the potential for suffering these penalties carefully as you proceed.

Highland Tax Group offers tax resolution services to help you get a handle on your IRS issues Contact us today to learn more about your options for dealing with tax debt.