It is not necessary to work with a tax professional to handle your federal tax debt, but it is highly recommended. They have knowledge and experience that help to make the entire process easier. A tax professional can also determine which tax relief program makes the most sense for your situation, whether it is an Installment Agreement, Penalty Abatement, Offer in Compromise, or something else. Additionally, they work on your behalf contacting the IRS and negotiating your settlement, allowing you to go about your normal business without having to worry about your tax debt.
To gain from these benefits, it helps to be prepared before you start to work with a tax professional. Although the tax professionals at Fidelity Tax Relief are ready to help you even if you come unprepared, you can hit the ground running if you make a few preparations ahead of time.
Have an Idea About Your Financial Situation
Before you contact a tax professional, or the IRS directly, to begin the process of working on your federal tax debt, take a moment to review your current financial situation. This does not have to be a complete audit and review of all your income, expenses, and assets, but you should gather enough information for a good idea of what you can afford to pay against your debt. This includes a rough estimate of your income, any other outstanding debts including car payments and mortgages, and your monthly expenses, as well as any real property or other assets you could liquidate to pay for your taxes.
With this information, you and your tax professional can determine the impact of paying your tax bill, as well as for what tax relief programs you might qualify. You can probably gather most of this information in a few minutes before you make your initial phone call or have your first meeting.
Don’t Wait Until the Very Last Minute
The stress and fear that arises when you receive a tax bill or warning about imminent collective action makes many people procrastinate and not take action, hoping it will miraculously disappear. However, you have to take action to finally settle your tax debt and stop collective action. The sooner you take action, the easier it becomes to handle. Plus, your tax professional has more time to assess your situation and get your paperwork into the IRS.
Therefore, to make the process easier, do not wait until the last minute to contact a tax professional. Reach out as soon as you get your first notice. Then, you do not have to waste time worrying; instead, that time can be spent doing something else while a professional handles your case and finds you a way to handle your tax debt and get compliant without having to worry about losing your home, car, or wages. We can still help you even if you are in collective action, but it is a smoother process — and much less stressful to you — if we start when you receive the first notice from the IRS.
Collect Your Documents
You will have to share important documents with your chosen tax professional before they can start the process of negotiating a tax settlement, applying for a tax relief program, or setting up an Installment Agreement. This generally includes your proof of income, which is often a W2, paycheck stub, or 1099 forms, depending on your situation. You might also have to provide receipts of your necessary monthly expenses, information about other outstanding debt, documents about your assets, and more.
Your tax professional will let you know which documents they need. It helps to start gathering these documents as early as possible so you can get the documents to the right people faster. Generally, your tax professional cannot get started until they receive the documents, so the more on top of it you are on your end, the faster they can handle your tax debt. If you are missing any of the required documents, discuss this with your tax professional; they can often provide recommendations on how to find copies.
Create Realistic Expectations
There are several ways to mitigate your federal tax debt. Some people find that filing outstanding tax returns greatly reduce their tax liability or even remove it. Others are able to negotiate a settlement to pay just a small percentage of their tax bill. However, most people find that the best way to handle their tax debt is to set up an Installment Agreement and pay down the debt over time with an affordable monthly payment. Others can reduce some of their liability through applying for a Penalty Abatement or Innocent Spouse Relief. Many of the tax relief programs the IRS offers have criteria that you must follow. Therefore, you must expect to only be able to get the tax relief for which your situation qualifies.
For example, if you have already filed the tax returns, then you will probably not be able to just submit a new tax return and reduce your liability. If you have a high income and several assets, then you might not qualify for an Offer in Compromise. Those who have a history of late filing and late paying probably cannot get a Penalty Abatement. Having an idea beforehand for what you might qualify can help you to have more realistic expectations once you begin. Your initial consultation with the tax professional can help as well.
It is also important that you recognize that it can take several months to finally complete your tax relief settlement. Some actions, such as filing back returns or setting up an Installment Agreement, might take place fairly quickly. However, applying for tax relief programs, such as an Offer in Compromise, might take months. You might initially receive a rejection and need to appeal the process. The good news is that while you are in negotiation with the IRS, you generally do not have to worry about collective action.
When you work with tax professionals, such as those at Fidelity Tax Relief, you remove a lot of the hassle of handling your tax debt. Although we are here to help you, the process goes much smoother if you take a moment to prepare yourself ahead of time so you can answer our questions and provide the documentation we need. This helps us work as your advocate to negotiate a settlement with the IRS. Together, we will handle your tax debt so you no longer have to worry about the IRS taking your home or garnishing your wages! Call us today at 877-372-2520 to learn more.