The first wave of stay-at-home orders has now been released in response to the Covid-19 situation. Local governments asked residents of cities to stay in their homes and away from businesses. State officials then came to the conclusion that some federal guidelines would be helpful to try and stop any overlapping jurisdictions. Forty Two states issued some kind of guidance as to which sectors they deem as being essential even during the pandemic. Essential workers are those who conduct services or operations that are normally essential to the critical infrastructure. If you are an essential worker and you know that you are going to be behind on your tax debt, then now would be the time for you to take the appropriate action.
If you know that you cannot pay your taxes, then you have to make sure that you pay them anyway. Ignoring your taxes will make the situation you’re in right now, worse. You need to pay the piper, and there are zero good alternatives out there. The penalties for you not filing your tax can be criminal, so file, even though you know you might not have the money. If you do not file by the deadline then you could face a penalty of 5% for any unpaid taxes you have. This will continue to add up until it reaches 25%, making the tax debt that you have way worse.
If you know that you are going to be in tax debt and you cannot make your payment within 120 days, then the IRS will give you the option to manage your balance. At this stage, you can request a payment plan. A long-term payment plan is otherwise known as an installment agreement. This is best if you believe that you are able to resolve the debt that you have, but need more time. Note, there will be penalties and interest to pay with this.
You can easily delay the payment for your tax debt if you are able to prove that paying the debt would stop you from being able to afford your living expenses. The IRS will come knocking on your door to try and collect the payment though and you will also have to pay back penalties and interest too.
An offer in compromise can help you to resolve the debt that you have for less than you owe. You will have to prove financial hardship though. You will also need to prove that you are unable to pay the debt back at all given your current situation.
Ultimately, the best way for you to relieve your tax debt as an essential worker would be for you to take action right now. The environment is ideal for tax forgiveness.
If you need some help with your tax debt or if you are unable to afford the bills that you have then please do contact Karim & Associates today. When you do, we can then work with you to make sure that you are given the help and support you need with your current situation.
Let's talk about how we can help. Schedule an appointment today with one of our financial experts and start your journey towards financial clarity and success.