If My Husband Owes Taxes, Do They Come After Me?
A reader doesn’t care about her husband’s old flames, just his old bills.
Don’t let back taxes drain your funds, lock your assets and leave you in a bind!
A reader doesn’t care about her husband’s old flames, just his old bills.
You’ll either have a windfall of cash to pay down debt, or learn you owe more
Sounds weird, but interest rates are cheaper than other borrowing options — or a fee for filing late.
Don’t make promises you can’t keep. Make money instead.
Whichever version of this passes is going to suck, unless there’s a radical change of heart. And brain.
The Witch of Debt hits the street to ask people about their money nightmares and other tales of financial woe.
A reader’s “idiot cousin” got him into tax debt. What can he do about the IRS — and his idiot cousin?
This week: A reader needs to rely on the kindness of the IRS. Believe it or not, that can work.
A reader fears for her boyfriend’s future — and her own.
Hint: His name starts with T and ends with rump. But at least it’s not Paul Ryan’s plan, and maybe if he gets a big break he’ll leave us all alone.
The IRS will use private debt collectors who have failed before, including one the federal government is already suing for ripping consumers off.
If you could get out of paying your taxes, would you rather gain 20 pounds, drop Wi-Fi for a year, or see your credit score plummet?
Most of us are confident we can file our taxes, but we hate doing it.
Higher tax penalties and lower tax bills projected for 2017.
A reader keeps hearing commercials about “settling back taxes.”
Plus, what to do if you legitimately owe the IRS.
A reader’s spouse didn’t turn in his taxes this year. What happens now?
All three credit bureaus will soon have to cut some bad information from credit reports, which could give a huge boost to many consumers.
They’ve all got into tax trouble with the IRS – for silly reasons.
An IRS plan to focus on helping taxpayers via online accounts could cost you, a taxpayer watchdog warns.
A reader’s mother has $37,000 in credit card debt. Her son thinks he found a loophole.
The good news: You can easily avoid all of them without breaking a sweat.
Believe it or not, people are getting more responsible with their tax refunds. But it’s even better for you if you don’t get a refund at all.
A reader wants to know what to do if you owe taxes and cannot pay.
A reader wants to know how to pay off tax debt without getting in (more) trouble.
You know these names — but we bet you didn’t know about their debts.
The percentage of Americans who understand government spending is smaller than the percentage of tax money spent on national defense.
States could be itching to audit the 62 percent of Americans who don’t pay this online use tax.
If you think credit card interest charges are high, then you may be surprised to learn that IRS interest charges can be higher. Each month, the IRS charges a penalty of a particular percentage on your unpaid tax debt. In most cases, it’s relatively small – about 0.50%. However, by law penalties can go up to 25%.
The IRS adds penalties, often based on how uncooperative you are. For example, if you didn’t file your return to try and avoid collection, that’s an extra penalty. It’s called “failure to file.” There are tons of penalties like this that drive up the percentage you pay. It caps out at 25%, but that’s still higher than most credit card interest charges. Penalties can turn bad tax problem into one that’s almost insurmountable.
You might think that filing a tax extension or filing for Currently Not Collectible status can stop penalty accrual. You’d be wrong. Penalties add up regardless of what you do to try and stop them.
If you owe taxes on April 15 (or the filing date for that year) and you file an extension, penalties still accrue. The penalties won’t be as high as they would if you fail to file. However, the extension doesn’t delay the application of penalty interest charges. Penalties still apply through the October deadline.
Even if you file for Currently Not Collectible (CNC), which stops all collection actions, the penalties continue to accrue. CNC will stop phone calls, garnishment and liens, but your tax debt will still grow each month.
Debt forgiveness means the entity you owe forgives a debt balance without penalties once you meet certain criteria. For example, once you serve a year in AmeriCorps, you qualify for up to $4,725 in student loan forgiveness.
There is nothing comparable in the world of tax debt. There are two options that are kind of close to forgiveness, but not really:
Innocent Spouse Relief doesn’t forgive the debt, but it removes your obligation to pay it. Basically, you must prove that your spouse incurred back taxes entirely without your knowledge. If you can show prove that, then you aren’t on the hook for the debt, but your spouse still is.
The other option, an Offer in Compromise (OIC), is more like debt settlement than forgiveness. You agree to pay back a percentage of what you owe, then the IRS discharges the remaining balance. It’s essentially like partial debt forgiveness, but in order to get it you must repay part of the debt.
Outside of these two options, there is no such thing as tax debt forgiveness. If you encounter a company that tells you they can guarantee tax forgiveness, it’s probably a scam!
When you talk about collection actions on debt, there’s usually a statute of limitations. For instance, in most states a credit card collection action can only continue for six years from the date the debt became delinquent.
By contrast, tax debt has no limitations. They can pursue you for as long as they need to in order to collect what you owe. There’s no discharge through bankruptcy and as we mention above, forgiveness doesn’t really exist.
This means the IRS is usually willing to wait it until your situation improves for you to pay them. They’re more than happy to put you on CNC, which stops collection actions but continues to accrue penalties. But this also means that getting an Offer in Compromise takes work. The IRS was accept a settlement offer easily. You must prove that they can have no reasonable expectation for full repayment. Unless you can prove that, they’ll put you on an Installment Agreement.
Whether you make an Offer in Compromise or an Installment agreement, make sure you can meet the obligation! It’s crucial that once you make arrangements with the IRS that you stick to the agreement. Otherwise, you can face more penalties and they’ll be less likely to work with you in the future. As you go through negotiation, make sure that whatever payments are set are something you can meet. Otherwise, you’re just making a bad situation worse.
If you’re negotiating with the IRS and you don’t feel confident in the repayment plan, don’t sign anything! Ask for CNC until your situation improves and you can pay more. Again, the IRS is absolutely willing to wait, so there’s no need to rush into a repayment obligation that you can’t meet.
This is also a good reason why you need a tax resolution specialist to help you negotiate. They can help you get the right arrangement for your needs. They can also effectively make the case for why you can’t pay more. Going through professional channels will often deliver better results when it comes to tax debt.
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