Do you owe back taxes? Always have a big tax bill at filing season? If so, you're not alone. But this situation is frustrating, financially challenging, and limits your future success. The good news is that help can come from an unexpected source: financial coaching. How can a financial coach help you conquer your tax issues? Here are a few key ways.
1. Budget for Back Taxes
Unpaid back taxes are a risk to your financial health both now and in the future. The IRS has broader collection powers than many civil creditors. They can seize assets and future refunds, making it hard for taxpayers to get back on solid financial ground.
Getting your back taxes paid is a particular hurdle as this money must come out on top of paying for current expenses and taxes. Budgeting for normal, everyday living expenses is hard for most people, so get help coming up with a plan that includes those back taxes. You'll have a light at the end of the tunnel and can even start planning for the future while paying off your past.
2. Create a Payment Plan
The IRS and most state tax agencies allow taxpayers to pay their tax bills over time. But what is a workable payment plan for you? As long as taxpayers stay within the requirements of the voluntary payment plan, they are free to determine the size of their monthly payments and how long their terms will be. However, paying the minimum keeps you in debt longer. Find the right balance by working with an impartial professional.
3. Increase Withholding
Unfortunately, if there's no way to legitimately reduce your income taxes, increasing payments throughout the year is the only solution. Work with a financial coach to identify places in your budget where you can shift spending so that you can send more to the IRS each month.
Of course, adjusting your withholding at work or deciding to pay higher estimated taxes isn't the end of the matter. You must also stay on track with your plans. This long-term execution is where a person's good intentions may not be enough. A financial coach meets with you regularly to help you stay on track with your new determination and adjust for unexpected problems which arise.
Where to Start
Could you use help solving any of these tax debt problems? Learn how a financial coach can help. Make an appointment today to meet with a professional in your state and begin moving forward with your life.