With April 15 just around the corner, many people are starting the tax filing process. If you find that you owe taxes to the government, it is important that you pay the total amount owed on time. However, many people find that due to unforeseen circumstances, they cannot make the payments owed. Tax debt refers to an individual’s or entity’s unpaid taxes.
Causes of tax debt
There are many reasons why a person may find themselves with tax debt. Generally, major life changes can keep people out of work, and prevent them from earning enough to pay off their debts. These life changes may include:
- Losing a job
- Developing a serious physical or mental illness
- Starting a new business that was not profitable
- Divorce
- Loss of a loved one
In addition to major life changes, a person might find themselves with tax debt if they fail to complete their taxes or fail to complete their taxes accurately. Filing taxes is not always easy, particularly if you have a more complex financial situation. As a result, even with the help of software and other resources, it is possible to make mistakes. Many people fail to properly calculate the amount of taxes owed, and therefore end up owing the government money.
If you are experiencing tax debt, you are not alone. There are many potential ways to resolve this issue, so that you are not dragged down by this debt for years to come. For example, you may be able to reach an agreement with the IRS to pay off your debt in installments or settle your debts by paying a reduced amount.
