Today TaxMama hears from Monte in the TaxQuips Forum who asked one last question. “Will my unfiled tax return and tax debt affect my credit?”
Dear Monte,
You can avoid that problem – if you work quickly.
First, make sure IRS takes no further actions until you file that 2009 tax return. Ask them to put your account on hold for 30-45 days. Then, once you determine how much you owe – pay the bill immediately.
They will send you another bill for the penalties and interest. If you’re going to try to fight your way out of, do it IMMEDIATELY. Use Form 843 – and check off the last reason on line 5a. Being very young and not having any experience with the tax system may be the foundation for a good reason for your oversight.
Stay on top of the IRS notices. Respond to each one. Sometimes, it takes a few letters and responses before they agree to waive the penalties. As long as you pay the interest and penalties BEFORE you get the notice of tax lien, it won’t affect your credit. Once you get that notice…it’s all over.
So, find a way to pay all the balances in full. Credit card payments may have a higher interest rate than IRS – but they don’t file liens if you miss a payment. In fact, you can usually get them to waive a late fee, at least once.
And remember, you can find answers to all kinds of questions about tax liens, and other tax issues, free. Where? Where else? At www.TaxMama.com.
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