Are you a U.S. expat grappling with tax debts?
You’re not alone! Many Americans living abroad face challenges with their U.S. tax obligations. Fortunately, there are several effective options to resolve your tax debts and settle with the IRS. Here are seven strategies to help you regain control of your finances and achieve peace of mind.
1. Offer in Compromise (OIC)
An Offer in Compromise allows you to settle your tax debt for less than the full amount you owe. It’s a viable option if you can demonstrate that paying the full amount would cause financial hardship. The IRS considers your ability to pay, income, expenses, and asset equity in determining your eligibility.
Action Step: Consult with a tax professional to assess your eligibility for an OIC and assist with preparing and submitting your application.
2. Installment Agreement
An installment agreement lets you pay your tax debt over time in smaller, more manageable monthly payments. This option is beneficial if you can’t pay your tax debt in full but can manage regular payments.
Action Step: Apply for an installment agreement through the IRS website or consult a tax professional to help set up a payment plan that works for you.
3. Currently Not Collectible (CNC) Status
If you are unable to pay your tax debt due to financial hardship, you can request that the IRS place your account in Currently Not Collectible status. This temporarily delays collection until your financial situation improves.
Action Step: Contact the IRS to request CNC status. You will need to provide financial information to support your request.
4. Streamlined Filing Compliance Procedures
If you have fallen behind on your tax filings, the IRS offers the Streamlined Filing Compliance Procedures to help you get back on track without facing penalties. This program is designed for taxpayers who can certify that their failure to file was non-willful.
Action Step: Gather your financial records and consult a tax professional to guide you through the streamlined filing process.
5. Penalty Abatement
The IRS may waive penalties if you can demonstrate reasonable cause for failing to file or pay your taxes on time. Common reasons include serious illness, natural disasters, or other unforeseen circumstances.
Action Step: Submit a written request for penalty abatement to the IRS, explaining your situation and providing any supporting documentation.
6. Innocent Spouse Relief
If your spouse or former spouse incorrectly reported items or omitted items on your joint tax return, you may qualify for Innocent Spouse Relief. This can relieve you from additional tax, interest, and penalties.
Action Step: File Form 8857, Request for Innocent Spouse Relief, with the IRS to apply for this relief.
7. Taxpayer Advocate Service (TAS) Assistance
The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers resolve their problems with the IRS and ensures that taxpayers are treated fairly. If you are facing significant hardship due to your tax situation, TAS can provide assistance.
Action Step: Contact the TAS to explain your situation and seek assistance. They can help expedite the resolution of your tax issues.
Conclusion:
By exploring and utilizing these seven options, U.S. expats can effectively resolve their tax debts and settle with the IRS. Professional guidance can make this process smoother and more manageable, ensuring compliance and financial stability.
Need Help?
Dealing with tax debts as a U.S. expat doesn’t have to be overwhelming. Our team of experts is here to help you explore your options and find the best solution for your situation. Contact our COO, Anshul Goyal, at anshul@kkca.io for personalized assistance and ensure your compliance with IRS regulations. Let us help you achieve financial stability and peace of mind today!
Disclaimer
The information provided in this blog is for general informational purposes only and does not constitute legal, tax, or professional advice. Please consult with a licensed professional for advice regarding your specific situation.
FAQs
1. What is an Offer in Compromise (OIC)?
An OIC allows you to settle your tax debt for less than the full amount owed if you can prove paying the full amount would cause financial hardship.
2. How do I apply for an installment agreement with the IRS?
You can apply for an installment agreement through the IRS website or with the assistance of a tax professional to set up a manageable payment plan.
3. What is Currently Not Collectible (CNC) status?
CNC status is a temporary delay in IRS collection activities due to your inability to pay the tax debt because of financial hardship.
4. How can I catch up on overdue tax filings?
The Streamlined Filing Compliance Procedures allow you to catch up on overdue tax filings without facing penalties if you can certify that your failure to file was non-willful.
5. What is penalty abatement and how can I request it?
Penalty abatement is the IRS waiving penalties for reasonable cause. You can request it by submitting a written explanation and supporting documentation to the IRS.
6. Who qualifies for Innocent Spouse Relief?
You may qualify for Innocent Spouse Relief if your spouse or former spouse incorrectly reported or omitted items on your joint tax return, causing additional tax, interest, and penalties.
7. How can the Taxpayer Advocate Service (TAS) help me?
TAS is an independent organization within the IRS that assists taxpayers facing significant hardship and ensures fair treatment, helping to resolve issues with the IRS.
8. What should I do if I can’t pay my tax debt in full?
Consider options like an installment agreement, Offer in Compromise, or Currently Not Collectible status to manage and resolve your tax debt.
9. How can I get professional help for my tax debt issues?
Contact a tax professional, such as a CPA or Enrolled Agent, who specializes in expat tax issues for personalized assistance and guidance.
10. How can I contact your team for help with tax debt resolution?
Reach out to our COO, Anshul Goyal, at anshul@kkca.io for expert assistance in resolving your tax debts and ensuring compliance with IRS regulations.