This week: A reader needs to rely on the kindness of the IRS. Believe it or not, that can work.

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Question: My husband and I needed to withdraw our 401(K) to basically live off of due to unforeseen medical expenses. With that being said, we have started a payment plan for 2015 taxes, which we can barely make, and will have to make payments for the 2016 returns.

My husband is 66 and I am 55, and we own a home, but still have a mortgage. My husband works part-time and takes his Social Security. I am working full-time.

Our question is, if we contact the IRS to ask to lower our monthly payments, will they work with us? We understand we need to pay our taxes, and are not trying to get out of that responsibility. However, we need to lower the payments.

Any suggestion/ideas would be helpful.

— Karen in Massachusetts

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Howard Dvorkin CPA answers…

Besides “complete thermonuclear annihilation,” the three scariest words in the English language for most people are, “Internal Revenue Service.” They shouldn’t be.

The IRS is surprisingly easy to work with. Please note I didn’t say enjoyable. However, if you’re having trouble paying your taxes, the IRS doesn’t want to bleed you dry, and it can’t throw you in debtors’ prison (which was outlawed in this country hundreds of years ago).

The worst the IRS can do also involves three words, and they sound innocuous: “federal tax lien.” That means the IRS lays claim “to everything that you own and anything that you may own in the future while the lien is still in place.” However, as you’ll read if you click that link…

Usually, the IRS will only place a tax lien when no effort has been made to resolve a tax debt, despite the numerous letters and notices they have sent.

So if you work with the IRS, it will work with you. Don’t wait, because every month brings more penalties and interest. You can also seek a deal. It’s called an offer in compromise, and it allows you to pay less than you owe.

If that sounds too good to be true, it’s not — although it does come with many strings attached. Click the link to read more, and realize the IRS accepts only a fraction of these offers. Still, it’s worth exploring.

One last piece of advice: If you’re struggling to pay your taxes, that’s not only a problem but a symptom of larger debt issues. I strongly urge you to take advantage of a free debt analysis from a certified credit counselor. You can do that simply by calling the phone number.

Have a debt question? Can’t find what you need to know? We can! Submit any debt or finance question you have, and we’ll tap a pro who will respond as quickly as possible.

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About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched I’m glad you’re here.

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