Settle Taxes Owed by Paying the Amount in Full
Yes, this is the most apparent method available for settling tax debt. If you currently do not have sufficient funds to pay the total amount due, with a little extra thinking, you might be able to come up with the amount needed to pay the IRS and get back into their good graces. By paying the tax debt in full, you are not responsible for paying any additional interest amounts that would accrue with an IRS payment plan. When you pay your taxes off in full, all IRS collection actions will halt, and any tax liens or levies will be removed.
If you lack sufficient funds to pay the owed amount to the IRS in taxes in full, read ahead and find out other alternative options to consider to get the money.
Home equity loan.
You have the ability to apply for a home equity loan if the value of your home exceeds your current mortgage value. A home equity loan is an excellent idea because the interest paid on a home equity loan is more than likely a lesser amount than any other form of a secured or non-secured loan. This is because the loan’s value is protected by a large asset – your home. It is a beneficial option if you currently owe money, and the charge associated with receiving a home equity loan along with the interest savings is a lot less than the amount of interest that will be paid if you take out a different loan, or sign up for an IRS installment agreement
Ask to borrow from friends and family.
Only use this option if you believe you have the ability repay your friends and family back soon. You do not want to pass your encumbering tax debt to friends and family when there are other tax debt settlement methods that the IRS has established. Only borrow if you will have funds available soon, for example, if you are planning to sell an asset or you have a bonus check coming in the near future which will enable you to immediately return the owed amount
If you have assets that you no longer need and an IRS tax debt looming, think about selling those assets. If you have an expensive collection that you no longer take interest in, but know it is valuable, think about selling it to get the funds to pay your tax debt. A yard sale is also a great way to put the necessary funds together and clean out the clutter from your home.
Borrow on credit.
Only choose this alternative if you will have funds available to repay quickly. By borrowing on credit and paying your tax debt in full, you are saved from any future interest or penalties associated with nonpayment. However, if you do not exhibit the capabilities to pay back the money you borrowed soon, it is more advantageous to discuss the possibility of signing up for an installment agreement. This will give you the opportunity to pay back the tax debt in monthly payments with a lower interest rate than with credit.