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The quick answer? Yes. But it’s not so easy.
Key points
- You may end up owing the IRS a large sum of money.
- It’s possible to negotiate a tax bill, but you’re more likely to be given the option to pay the IRS what you owe over time.
Many people who file a tax return end up with a refund on their hands. But what if you happen to land in the opposite situation?
There are plenty of reasons why you may get stuck with a tax bill, and a large one at that. If your income increased a lot last year, or you did a lot of work on the side and didn’t have taxes taken out of those earnings, then you could end up owing the IRS a lot of money on your 2021 return. Or, perhaps you sold investments in your brokerage account at a profit last year. That, too, could contribute to a large tax bill.
Related: Best Tax Software
If you owe the IRS a whopping sum and don’t have enough money in the bank to pay it by the April 18 tax deadline, worry not. For one thing, the IRS will almost always allow you to get on an installment plan and pay off your tax debt over time. But in some cases, it may also be possible to negotiate your tax bill downward. Here’s what you need to know.
Will you get a break on your tax debt?
If you have a tax bill you can’t pay, then you may be able to negotiate the sum you owe. But before we go any further, let’s set some expectations: Most of the time, the IRS will not let you off the hook when you owe money on your taxes. But in more extreme situations, the IRS might agree to an offer in compromise.
An offer in compromise is an agreement in which you and the IRS settle on a lower tax bill than what you initially owe. For example, say you owe the IRS $20,000. If you can’t pay that sum, the IRS might agree to reduce your tax debt to $10,000 and forgive the remaining $10,000.
But qualifying for an offer in compromise isn’t easy. To do so, you must prove a couple of things:
- That you don’t have the income or assets to pay …….
Source: https://www.fool.com/the-ascent/taxes/articles/can-you-negotiate-your-tax-bill/
