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Self-employed individuals face distinct tax obligations that can complicate their financial landscape. Unlike traditional employees, who have taxes withheld from their paychecks, self-employed individuals are responsible for estimating and paying their taxes quarterly. This responsibility can lead to tax issues if the estimates are incorrect or if the individual experiences fluctuations in income. Failing to make these payments can result in accumulating tax debt, making it crucial for self-employed individuals to remain vigilant about their tax obligations.
The Risks
The risks associated with tax debt for self-employed individuals are significant. Firstly, the IRS may impose penalties and interest on unpaid taxes, increasing the overall amount owed. If the tax debt becomes substantial, the IRS could take more severe actions, such as placing a lien on the individual's property or levying their bank accounts or wages. These measures not only threaten financial stability but can also damage personal and business credit ratings. Understanding these risks is essential for self-employed individuals to take proactive measures in managing their tax responsibilities.
General Options
If a self-employed individual finds themselves facing tax debt, the IRS offers several resolution options. One common route is an installment agreement, allowing individuals to pay their tax debt over time rather than in a lump sum. Another option is an offer in compromise, which enables taxpayers to settle their tax debt for less than the full amount owed if they can prove financial hardship. Additionally, individuals may request a temporary delay in collection actions if they can demonstrate that paying the debt would cause significant financial difficulty. Exploring these options can provide relief and help individuals regain control over their financial situation.
This is general information only. For specific advice, consult a tax professional.
How FreshRelief Can Help
At FreshRelief, we understand the complexities of tax debt, especially for self-employed individuals. Our team is dedicated to providing tailored solutions to help you navigate your tax challenges. Whether you need assistance with negotiating a payment plan or exploring an offer in compromise, we are here to help you find the relief you deserve. Contact us today to take the first step toward resolving your tax issues!