Know What Happens if You Owe the IRS More Than $25,000?

Are you one of those wondering what happens if you owe the IRS more than $25000? This can be a serious concern when it comes to owing such a huge amount of money to the IRS. You should understand that if you owe more than $ 25,000 to the IRS, the next significant step or actions might trouble you in some way. Generally, the IRS levies heavy penalties, such as passport revocation, asset seizure, or bank levies.

In this short blog, you will learn what happens when you owe the IRS more than $25000. Let us find out. 

What Are the Consequences When You Owe the IRS More Than $25000?

• The IRS files a notice of Federal Tax Lien against you for the unpaid taxes. Remember, the IRS can file a lien on all your property, bank accounts, vehicles, and other assets. 
• The IRS can also levy and has the authority to seize your assets, such as bank accounts, wages, and investment accounts, against you for a large tax obligation. Remember, there are a few assets the IRS cannot seize. 
• Remember, since you owe the IRS more than $25,000, your monthly interest and penalties can quickly add up to a very high balance. The charges, interest, and any penalties start compounding daily, increasing your overall liability. This added cost can hamper you more in the long run. 
• When a taxpayer like you owes more than $25000 to the IRS, your wages can be garnished. This means that the IRS will ask your employer to withhold a certain amount of your paycheck to fulfill your tax liability. In other cases, the IRS can also seize a certain amount from your bank account ot realize the tax obligation. 

What Are the Best Options if You Owe the IRS More Than $25000?

The best options are as follows:

• Fully pay your tax liability. This is one of the simplest and best ways to avoid liability for your taxes. You will save a lot of interest and penalty if you pay your tax obligation in full. 
• Another option is to get a streamlined installment agreement from the IRS. A certain amount will have to be deducted from your account to fulfill your tax liability to the IRS. Taxpayers who owe less than $50,000 can use a Streamlined Installment Agreement to pay the IRS in monthly installments.
• You can also opt for a non-streamlined installment agreement from the IRS. 

Way Ahead

Owing more than $25,000 to the IRS can lead to serious financial consequences if not addressed promptly. The IRS can initiate actions such as tax liens, wage garnishments, bank levies, and escalating penalties, which can heavily increase the overall tax liability.  Understanding your options, such as paying the balance in full or setting up an installment agreement, can help you take control of your tax debt and avoid further enforcement from the IRS. Taking action early can make a big difference in resolving what you owe and protecting your hard-earned money.