The holiday season is a time to focus on family and friends and enjoy quality time with loved ones. It is easy to let financial obligations put a damper on celebrations, particularly for those who have not filed taxes in recent years or who owe California state or federal taxes. Nothing takes the twinkle out of that Christmas star quite like concerns over tax bills.
Thankfully, there are options to help taxpayers manage their tax bills. The following tips can help taxpayers get their taxes in order and move forward with a bright New Year.
Tip #1: Deal with back taxes
First, it is important to make sure all tax filings are up to date. If you owe taxes for years that you did not file, in addition to the owed tax bill you may find yourself subject to financial penalties and interest on the owed tax.
Tip #2: Manage tax bills
Options are available for taxpayers who find their tax obligations are too much to pay off in one payment. An offer in compromise can result in a lower tax bill. This essentially involves the taxpayer proposing a different, lower payment amount to the IRS in exchange for forgiveness of the remaining tax balance. This option requires the taxpayer establish the offered amount is all the IRS could reasonably expect to recover from the taxpayer.
Taxpayers can also consider an installment payment plan. These plans allow taxpayers to make smaller, more manageable payments on a regular schedule to slowly come into compliance with their tax obligations.