If you’re starting the year with IRS debt hanging over your head, you’re not alone.
A lot of folks say that they’ll deal with it “after tax season” or “once things slow down”. Another year quickly passes and the problem continues to fester.
The truth is, January is one of the best times to deal with IRS issues – even if that seems a bit odd. While it would be great if the IRS wiped the slate clean for the new year, it doesn’t.
January is a chance to take action before things escalate.
Early in the year, IRS collection activity tends to be quieter. Tax season is around the corner and it’s focused on dealing with the flood of W-2s and 1099s filed by employers. That means fewer surprise notices, less pressure, and more time to look at your options without feeling rushed. It’s also a chance to get ahead of the problem before tax season ramps up and enforcement becomes more aggressive. For example, if you are self-employed and you haven’t paid estimated taxes in the past, now you have time to prepare for the 1st quarter payment due on April 15th.
January is a smart time to review your financial information and consider your options. If you are in business, you have a chance to collect a full years’ worth of information to estimate out your current income and expenses, key to setting up a payment arrangement with the IRS. If you are living a bit outside your means, you can see what areas you can cut back and what is necessary with the clean slate of the New Year ahead of you. Finally, if you have unfiled returns, you have a bit of time to get information together and get them prepared before the IRS steps in and files a substitute return that will not be in your favor.
IRS problems don’t go away on their own, but they’re rarely as hopeless as they seem.
The key to dealing with the IRS is getting prepared. Start the year with a plan – even a simple one – so you can relieve yourself of a lot of stress and prevent this issue from following you through another year.
If IRS debt is something you’ve been meaning to deal with, January gives you a chance to handle it calmly and on your terms before the year gets busy. With all that heavy stuff out of the way, you can fill your New Year’s resolutions with things you have no intention of doing such as going to the gym, remodeling the kitchen, and doing the Boston Marathon.
