What is tax debt?
Tax debt is the amount of money a person owes to the government out of his or her income. Each person owes the federal or state government a percentage of whatever income he or she accumulates over the period of a year. That money is documented in a tax return and paid by the taxpayer once every year. Currently that bill comes due on April fifteenth.
How does tax debt work?
Ideally tax debt is paid to the government by the fifteenth of April each year by use of a tax form on which the taxpayer lists all his or her income, uses the tax schedules provided to figure the tax he or she owes, and then sends a check or money order to the government to cover the debt along with the form, keeping a copy for his or her own records.
Should the debtor not be able to pay his or her tax debt by April fifteenth, he or she can file for an extension in order to give him- or herself more time to get the money to pay the tax debt. If the taxpayer fails to file his or her tax forms or pay the tax debt due, then the government will try to collect the debt by various means ranging from a notification letter and going through filing a law suit to collect and finally filing criminal charges against the person who has failed to file or pay his taxes. It is a criminal offense to fail to file the tax forms.
How to get out of tax debt on your own?
The simplest way to get out of tax debt is to pay the amount owed. Sometimes that may not be possible however and in that case the IRS will negotiate with the delinquent taxpayer to arrange a way for the tax to be paid. There are many different remedies for the tax payer who is sincerely trying to pay the debt but is just not able to do so. The debt can be deferred, though the interest will continue to accrue, or the tax payer may be able to arrange monthly payments though again the interest will continue to accrue on the unpaid balance. The government can attach wages and bank accounts should the tax continue to be unpaid.
How to pay off tax debt fast?
Taxes can be paid off fast by writing the government a check for the full amount. If that isn’t possible, a debt consolidation loan can be taken out to pay the entire amount. The loan is a viable option because the interest on the loan is usually less than the interest the government will charge on the unpaid balance of the taxes. If monthly payments have been negotiated then the payments can be increased or paid in shorter intervals. For example, if the payments are scheduled to be paid monthly they can be made twice a month so that they will be finished in half the time.
