Taxes are a necessary part of life. Sometimes, mistakes happen and things can be forgotten, leading to back taxes. Below are some ways that Chicago’s trusted tax accountants can help you.

Set Up an IRS Payment Plan

Setting up an IRS payment plan can alleviate the anxiety surrounding unpaid taxes. To set up an IRS payment plan, you must:

• Pay $149 for the application fee ($43 for low-income taxpayers)
• Have a signed agreement in place within 120 days
• Be ready to make the first payment within 120 days
• Be sure that the plan is paid in three to six years

Making manageable payments is crucial for accepting an IRS payment plan. Missing or delayed payments could result in voiding the payment plan altogether. Interest rates apply to payment plans but vary based on additional taxes owed.

Offer in Compromise

Offer in Compromise is a way to deduct the amount owed on your back taxes. Generally, this option is available to anyone who does not have the means to pay what they owe. Once an application has been filed for an Offer in Compromise, the IRS will suspend collection activities. Offers in Compromise include the following stipulations:

• A non-refundable $205 fee for the application (can be waived for low-income applicants)
• Keep you up to date on all taxes
• Cannot file if filed for bankruptcy
• Ability to make an initial non-refundable payment

Enlisting Help

A common way to confront back taxes is to hire a tax specialist who can guide you through the best options. Reputable tax consultants are ultimately the safest option to ensure accuracy in dealing with federal income taxes. And while there are additional costs involved with enlisting the aid of a tax company, it is worthwhile to avoid the financial consequences of tax liability.

Obtaining a Loan

To avoid the repercussions of back taxes, you can apply for a loan to supplement payback. A loan is a good solution for small business owners, anyone who has successfully paid off a loan before, or someone who can tackle the interest rate. If your credit is in good standing and you do not have other additional balances, obtaining a loan may be the best plan.

Short-term Extension

If you can pay back the total balance and need more time, a short-term extension could be the right choice. There is no application fee for this option, and you have 120 days to pay the entire balance. There is an interest rate of 0.5% for every month the balance goes unpaid and an additional 0.3% for every passing quarter. If the interest rates are lower than an application fee or if you foresee having access to pay the total balance, a short-term extension is a great option.

Getting Help

What matters most is the solution to addressing back taxes. Odoni Partners offers tax-based services to help you with your back taxes. Take the intimidation out of handling back taxes and learn when to hire an accountant for your small business.