If you are someone who currently owes the IRS or expects to owe after filing recent tax returns, you might be curious if you can settle your tax debt. The Offer in Compromise program is not for everybody (only 40% of WATAX clients get OICs), but some people certainly can qualify. One of the keys is how much you owe!
Here is a summary of the key data points to see if you can settle with the IRS:
1. How much do you owe in back taxes?
2. When are these debts going to expire? The expiration date is ten years after the returns were processed by the IRS or when the IRS filed the returns for you.
3. What is the quick sale value of your assets and what exemptions apply to these assets? Houses are valued at 80% for quick sale, for example. Cars have exemptions. Household goods and tools do as well as does your "monthly nut" in your bank account.
4. What is your "allowable" monthly disposable income? After you pay your basics (capped by IRS allowable standards): house, transportation, medical, current taxes, you are left with your allowable "disposable" income.
5. Can your "allowable" disposable income pay off what you owe the IRS before the debts expire?
If your owe the IRS $20,000 for 2017 and that debt is going to expire in ten years (120 months), you will need to show that you don't have $167 allowable disposable income to qualify for an OIC (assuming you don't have significant assets too) or $20,000 divided by 120 = $167.
If your disposable income is $500 month, you will need to owe more than $60,000 to settle.
If your disposable income is $2000 month, you will need to owe more than $240,000 to settle.
If your disposable income is $5000 month, you will need to owe more than $600,000 to settle.
WATAX helps people and businesses with tax problems. Non-filers and people who owe taxes. Call us at 1-888-282-4697 or send us a description of your tax issue in an email and we'll contact you.
Call and talk with a tax expert for free: