If you find yourself behind on paying back taxes, we recommend you take immediate action to attempt to mitigate the damage. Here are our top tips for what to do when you owe back taxes:<\/p>\n
1. File an extension<\/strong><\/p>\n If you need more time, have your tax preparer file for an extension. That will allow you to file later in the year instead of in the spring. While this will not reduce the amount you owe or stop the compounded interest and hefty penalties from accruing, it will give you more time to prepare and meet the deadline.<\/p>\n 2. Payment Plan<\/strong><\/p>\n If you know you cannot pay your tax debt in full immediately, set up a short- or long-term payment plan with the IRS.<\/p>\n 3. Offer in Compromise<\/strong><\/p>\n An offer in compromise is a negotiation with the IRS where the agency settles your tax debt for less than what you owe.<\/p>\n 4. Request Currently Not Collectible Status<\/strong><\/p>\n Suppose the taxes you owe cause significant hardship. In that case, the IRS may grant a temporary hold on your account and place it in \u201ccurrently not collectible\u201d status.\u00a0While the tax is still owed and penalties and interest continue to pile up, collection efforts from the IRS are temporarily suspended.<\/p>\n 5. Contact a Professional<\/strong><\/p>\n