How to reduce your tax debt
If you’re in debt to the IRS and owe anywhere between $10,000 and $25,000 then you should highly consider getting help from a tax professional. In addition, you will also need to make sure that your original tax returns are precise and that you’ll be able to keep up with the payment plan you set up for yourself.
If you’re in the situation owing over $25,000 to the IRS then you should definitely hire a highly qualified tax professional that has plenty of experience to help dig you out of debt.
In finding a tax professional, you should always ask for their credentials. A tax professional has to be a tax attorney, a Certified Public Accountant or an Enrolled Agent. These are the only professionals that are eligible to practice before the Internal Revenue Service; however, CPAS and attorneys are limited in practicing in certain states where they’re licensed. On the other hand, Enrolled Agents can practice in any state they choose.
Interact with your tax professional, and have them focus on their strategies of negotiation with the IRS and less on their data entry and other paperwork. Additionally, you can ask them what paperwork and IRS forms you’re able to fill out on your own so that you can cut the overall fee of their services. A tax professional will do one of two things: charge you an hourly rate for their services or they will quote you a flat fee for all of their services.
If you’re in the scenario of not having filed your taxes then you’re in a position that has more advantages. The reason is because you are able to take every tax deduction that you’re legally entitled to in order to reduce your tax liability.
In the case that you’ve already filed your taxes, your tax professional will be able to quickly review those returns for accuracy. They can catch if you are entitled to deductions that you might have overlooked by doing them yourself. The process of amending a return will require a solid amount of paperwork and reprocessing. An amended return must be completely accurate with an abundant amount of supporting documentation; if you do not have a substantial amount of documentation you may risk getting audited by the IRS. In general, you’ll want your tax professional to gather a complete set of documentation from the IRS and compare that information to the tax documents you already have in possession. Once your tax professional has done a very thorough check of your tax situation, they should advise you on whether or not to file an amendment with the IRS.
Remember that you will have to keep open communication with your tax professional to get the most out of their services. Always double check on what they’re doing, and check on what you’re doing to help in the process of getting yourself out of debt. If you happen to owe the IRS less than $10,000 then you might be able to handle the situation on your own.