Tax debt is fearful. Moreover, the longer you take time to pay off them, the higher the penalties and interest the IRS department will add to the original bill.
The best way to counter every negative outcome is to pay off tax debt at the earliest. One can do this with multiple options but if you are residing in Mississippi then applying for title loans Mississippi is good to go financial alternative.
Continue to read and find out more about the tax debt.
Things to know regarding tax debt
The global coronavirus pandemic has made the IRS postpone Tax day for 2 years directly. This time, you need to file as soon as possible for clearing the pending tax debt.
Presently, the interest rate is 3%. This goes with the original tax, any added interest, and charges as it compounds every day until the concerned person does not clear the tax debt in full.
The fee for not paying the tax debt is 0.5% of the pending amount every month until you clear the amount, or until additional charges add up to 20% of the tax amount you owe. If you are behind on filing the tax return, extra fees will go along as well.
Clearing the tax bill at the earliest is the ideal way for avoiding interest and fees charged by the IRS.
Try addressing the tax situation timely:
The pending tax debt will go out of hand if you do not manage it. In addition, if you fail to pay timely, the IRS will track the charges and interest to the pending balance. The interest rates are equal to the federal short-term rate of 3%. The monthly fees for not paying on time start at 0.5% of the tax debt. Other fees will add up at the highest rate, specifically if you fail to file the taxes at all.
The amounts will add up at a fast pace combining additional financial burden on the taxes you owe already. Besides, if you leave the taxes unpaid for long, the IRS will impose liens on the income and property.
Try to Make Lowest Payments:
The payment contract depends upon you being able to make the lowest monthly payment equal to the entire tax debt calculated by 72 months. One can pay more for a particular month; however, you cannot make less payment than the amount decided to pay. The IRS will send the notice every month with the payment you owe alongside the due date. You can set up an automatic payment from the bank account resulting in a direct deduction for avoiding any legal notice.
If you cannot pay the lowest then you must contact the IRS to work out a different payment plan. One must fill out Form 9465 instead of applying online. The IRS will consider the finances for deciding whether the need is to change the agreement, involving details such as:
- How much cash do you need to pay the tax debt if you want to sell the assets?
- Do you have accessible credit?
- Can you borrow cash with a credit card or title loan to pay the IRS?
- How many funds do you have every month after clearing the pending expenses?
The remaining income after clearing the living expenses is how much the IRS will assume from you to pay every month.
How to clear tax debt?
In case you do not have the required cash in hand for paying tax debt instantly, taking credit is the best option present- and much more economical than allowing interest and charges to accumulate with the pending tax debt.
Check out the best options present:
Credit card:
The credit card charges high-interest rates in comparison to any other loan option, and IRS penalties. Moreover, if you can apply for a credit card with a 0% APR duration and clear the debt before the promotional duration, the credit card will become an interest-free path for managing tax debt. If you cannot pay before the promotion duration then you have to bear high-interest rates. There are certain drawbacks of choosing a credit card such as:
- If you fail to clear the debt then the interest will go higher making it tough to clear payments
- Getting a new credit card will affect the credit ratings
- In case you have trouble making payments with time, you will land into the debt pool.
Home equity
Utilizing the home equity for paying tax debt is another option on the list. Tax debt is the unsecured debt, considering the property, such as a home, is not at risk until the IRS imposes a lien. Clearing the tax debt with the home equity loan, or home line of credit will turn the unsecured tax debt into a debt secured with the home equity utilized. That mentioned if the pending tax debt brings you the risk of not being able to make the mortgage payment, or the IRS placing lien on the house, withdrawing equity for paying off the debt is the only solution.
Title Loans
No matter what type of financial situation you are facing, getting quick money will help to clear the tax debt. Moreover, if you never required cash then you were not reading this post. Applying for online title loans Mississippi will help to get instant financial assistance. In addition, this financial option does not charge high interest and offers flexible payment plans. Choosing Title loans Mississippi offers the benefits such as:
- One will never experience failure while making payments to the IRS
- Avoiding the high penalties and interest charged
- Tackling the risk of the IRS imposing a lien on the personal asset
Now you have come to know about the best option to clear the tax debt, So stop worrying and get the issues settled with the right financial help today!
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