How to Pay Taxes When You're Broke

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To pay taxes when you are broke, file an insolvency petition, file for an Offer in Compromise, or try filing for a payment plan through the IRS. Explore options to pay taxes when your funds are insufficient with information from an IRS tax agent in this free video on personal finance.

Part of the Video Series: Paying Taxes
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Video Transcript

On this segment we're going to talk about how to pay taxes when you're broke. Well, there's a petition you can file. It's called Insolvency. Perhaps the I.R.S. will grant it. If you have any chance of paying that debt back, based on your income and your assets, they're not going to grant you the Insolvency. But, perhaps, they could arrange payments by way of the 9465 Form. And your third option is to file for an Offer in Compromise. A few years ago, the I.R.S. was granting the Offers of Compromise pretty liberally. In recent years, they are not. Offer in Compromise is, uh, a number of forms that you submit when you owe taxes that you're not able to pay. For instance, if you owe $20,000 in taxes, you may make an offer to pay half of that. When you make your paperwork for that, you have to include ten percent with your forms and that is applied to your bottom line and reduces the tax. That's not refundable. Once you've paid that, you've paid it. The forms are quite complicated and very, very detailed. You have to put all of your assets on the form, all of your income and all of your outgo. It's very detailed and it's an expensive form to hire someone to prepare for you, generally, because it's very difficult. If you own, owe money less than $10,000 it's probably not worth trying an Offer in Compromise. Instead, do a payment plan, a payment request form, which is 9465, or, if the case may be, you might file for an Insolvency. Thank you.

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