Tax time is not something that anyone looks forward to. Doing the paperwork is tedious, but when you owe taxes, this makes it seem like even more of a chore that would be better ignored. However, by filing your taxes on time and submitting payment in full, you can avoid less than desirable types of situations, such as wage garnishment.
“Wage garnishment” are two words no one wants to hear, let alone face. It reminds me of the scene in “The Pursuit of Happyness” when Will Smith’s character realizes that the IRS has dipped into his bank account and done just that. What little means he had took a big hit in an unexpected way. It’s an incredibly stressful situation, to say the least.
So, how can you prevent something like this from happening to you? The first thing to keep in mind is that when it comes to finances and especially the IRS, the right thing to do is be proactive. It might seem easier to avoid the mail notices or phone calls alerting you to the fact that you owe money, but in reality, the sooner you face it, the easier it is to find a solution. Just because you choose to ignore the problem doesn’t mean that it goes away. In fact, it will worsen over time.
In the early stages of owed debt, you have the opportunity to speak to the IRS about setting up a possible payment plan that can work within and provide relief for your income and monthly budget. Remember that the IRS is concerned with receiving the money that’s owed to them. When you take the steps to work with them rather than against them, it’s most likely to have a more favorable result for all parties involved.
Avoidance only delays the inevitable and then eventually you are left without any options and no control over the outcome. A wage garnishment means that money from your paycheck may be automatically allocated to the creditor or organization it’s owed to. When you owe back taxes, you will have to make payments until the balance is paid one way or the other. This part is unavoidable. It makes it easier when you can set up a plan that works for you on a day-to-day basis, rather than being surprised by a sudden dip in your bank account balance.
Another factor to consider is when wage garnishment takes effect, this means that your employer is now involved in your financial status, which can be an embarrassing situation on its own. Typically, employers are required to share with their employees the withheld amount. Although it is unlawful for an employee to be fired over wage garnishment, this legal protection does not apply to a second or third similar judgment. In short, prevent this from occurring in the first place to avoid troubles down the road.
If this sounds overwhelming to you, it doesn’t have to be. There are professionals who can help with tax debt when you are feeling the financial strain. Gather all your tax documents, including your tax returns, calculate the amount you believe is owed, and share any correspondence already received from the IRS. When it comes to situations like these, reaching out for help sooner than later is best. Don’t wait until you start to receive final notices to take action.
With your authorization, a tax debt relief professional can speak to the IRS on your behalf and negotiate a payment plan or in some cases, a reduced payment in order to make sure you cover any back taxes that are owed. Provide full disclosure to the representative you hire to help with your financial stress. Be honest with just how much you can pay per month, so that they can relay this information to the IRS and prevent a tax lien or wage garnishment. Sure, hiring a tax professional to help you out will cost you some money. But, sometimes you have to spend money to save money.
Millions of Americans find themselves in a tough spot when it comes to tax time. Either they owe more in taxes than previously calculated, they don’t have the income to pay the full amount all at once, or they have avoided the problem for so long, that it’s finally caught up to them. Rather than trying to fix an ever-growing problem, face it head on and prevent the worst case scenario from occurring. This will help alleviate the situation both financially and personally. Being proactive and trying to prevent these things can be achieved by simply keeping a record of all of your receipts for expenses that might be able to be written off. You can also download a personal finance app to help you keep track of all factors of your budget, income, and overall finance situation. We all make mistakes, but no one wants to feel the stress that tax debt can impose. There are ways to prevent it and professionals who can help make the process a little bit easier.