Tax Debt Clarity
Tax Debt Clarity
Tax Debt Clarity Tool
Get Tax Clarity: Understand Potential IRS Payment and Resolution Options
Learn about your tax resolution paths below:
Pay in Full Path:
If you don’t pay your tax in full when you file your tax return, you’ll receive a bill for the amount you owe. This bill starts the collection process, which continues until your account is satisfied or until the IRS may no longer legally collect the tax.
The first notice you receive will be a letter that explains the balance due and demands payment in full. It will include the amount of the tax, plus any penalties and interest accrued on your unpaid balance from the date the tax was due.
The unpaid balance is subject to interest that compounds daily and a monthly late payment penalty up to the maximum allowed by law. It’s in your best interest to pay your tax liability in full as soon as you can to minimize the penalty and interest charges. Some taxpayers explore other ways to pay their balance, such as credit or loans.
Currently Not Collectible (CNC):
Pause IRS collection if paying would leave you unable to cover basic living expenses.
If your income only just covers, or doesn’t cover, your basic living expenses, the IRS can mark your account Currently Not Collectible (often called CNC, or hardship status). This tells the IRS that collecting from you right now would create a financial hardship.
How the IRS decides
- It compares your income with allowed living expenses. The IRS uses its published standards for housing, food, transportation and health care, along with your actual costs. If little or nothing is left over each month, and you have no significant assets to draw on, you may qualify.
- You show this with a financial statement: usually Form 433-F (or Form 433-A), with documents supporting your income and expenses.
What it does
- The IRS generally stops active collection, such as taking your wages or bank accounts, while your account is in this status.
- There’s no setup fee and no monthly payment.
What to know
- Your debt isn’t forgiven. Interest and penalties keep adding up while your account is paused.
- The IRS may file a tax lien, and it will usually keep any future tax refunds and apply them to your balance.
- It can be reviewed. If your income goes up (the IRS sees this on your tax returns), it can resume collection, or ask you to start a payment plan.
- The collection clock keeps running. The IRS generally has 10 years from when a tax is assessed to collect it. If your account is still in this status when that period ends, the remaining balance generally can no longer be collected.
- You must keep filing your tax returns on time while your account is paused.
Is it right for you? Currently Not Collectible fits when you can’t afford any monthly payment right now, and your situation isn’t expected to improve soon. If you could pay something each month, a payment plan may fit better; if your situation is unlikely ever to improve, an Offer in Compromise may resolve the debt permanently. The Tax Debt Tool shows which option your numbers point to.
IRS Payment Plan:
Pay what you owe over time, in monthly amounts you can manage.
If you can’t pay your balance all at once but could pay it off over time, a payment plan (the IRS calls it an installment agreement) is usually the simplest option, and often the fastest to get.
How it works
- Short-term plans give you up to 180 days to pay in full, with no setup fee.
- Long-term plans let you pay monthly over several years. If you owe $50,000 or less in combined tax, penalties and interest, you can usually apply online without a detailed financial statement, and pay over up to 72 months.
- If you owe more, the IRS will ask about your income, expenses and assets, using Form 433-F or 433-A, to decide what monthly payment you can afford.
What to know
- Interest and penalties keep adding up until your balance is paid, though the late-payment penalty is cut in half while your plan is in good standing.
- A setup fee usually applies. It’s lowest if you apply online and pay by automatic bank withdrawal, and it can be reduced or waived for lower-income taxpayers.
- You must stay current: file all your returns, and pay future taxes on time. Missing payments or new balances can cancel the plan.
- While your plan is in place, the IRS generally won’t take your wages or bank accounts.
Is it right for you? A payment plan fits when you can afford a monthly payment that clears your balance within the IRS’s time limits. If you can’t, an Offer in Compromise or Currently Not Collectible status may fit better, and the Tax Debt Tool shows which one your numbers point to.
Offer in Compromise (OIC):
Settle your tax debt for less than the full amount, if you can’t realistically pay it.
An Offer in Compromise lets you propose to settle with the IRS for less than you owe. The IRS accepts an offer when it agrees that the amount you’re offering is the most it can reasonably expect to collect from you.
How the IRS decides
- It’s based on your finances, not on hardship stories. The IRS adds up the equity in what you own (such as savings, vehicles and home equity) and the amount it could collect from your future income, after allowed living expenses. That total is called your reasonable collection potential.
- If you owe more than that amount, an offer may make sense. If you could pay your balance in full over time, the IRS will usually expect a payment plan instead.
How it works
- You submit Form 656 and a detailed financial statement (Form 433-A (OIC)), with an application fee and a first payment, unless you qualify as low-income, in which case these are waived.
- You choose how to pay: a lump sum (20% with your offer, the rest in up to five payments after acceptance), or monthly payments that begin while the IRS reviews your offer.
- Reviews take time, often several months or more. The IRS generally won’t take your wages or bank accounts while your offer is under review.
What to know
- You must be up to date: all required returns filed, and current-year estimated payments made.
- The IRS keeps any tax refunds for the year your offer is accepted, and for earlier years.
- After acceptance, you must file and pay on time for five years, or the original debt can come back.
- Not every offer is accepted. If yours isn’t, payments made with the offer generally aren’t returned, and you may still have other options, including an appeal.
Is it right for you? An offer fits when your income and assets can’t cover your balance before the IRS’s collection deadline. The Tax Debt Tool estimates your reasonable collection potential, so you can see whether an offer is worth pursuing before you pay anyone.
Precheck
Precheck
These are the precondition questions the IRS uses to decide on an Offer-in-Compromise. This module is a demo and does not require sign-in.
Payment Plan & OIC Compliance Tool
These are the precondition questions the IRS uses to decide on an Offer-in-Compromise. This module is a demo and does not require sign-in.
Awesome! You meet the IRS Preconditions!
The IRS will consider an Offer in Compromise.
Next we'll show a summary of what this means and then you can decide whether to explore a fully eligibility estimate.
Payment Plan & OIC Compliance Tool
These are the precondition questions the IRS uses to decide on an Offer-in-Compromise. This module is a demo and does not require sign-in.
Sorry, you did not pass the IRS preconditions
But that's ok. We can still help!
Contact us to discuss options for this and that and the other thing.
Create an Account
Before we continue to Step 3 and calculate your estimated Payment Plan payment & Offer in Compromise amount, please create a Tax Debt Pros account
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Estimator
Tax Debt Pros Payment Plan, OIC Estimates &
This tool provides educational estimates of possible IRS collection alternatives using public IRS guidance and the information you enter. It does not provide legal or tax advice, does not create an attorney-client relationship, and does not determine eligibility for any IRS program.
- 1Taxpayer Info
- 2Assets
- 3Income
- 4Expenses
- 5Estimate
Taxpayer info content goes here from Pete. Taxpayer info content goes here from Pete. Taxpayer info content goes here from Pete.
Household & Marital Questions
Tax Debt Summary
Now lets review what you own. The IRS considers assets when reviewing collection options. Please list assets based on current estimated values.
| Cash & Accounts | Balance | Loan amount |
|---|---|---|
| What is your current balance of any cash or money in a bank or online accounts? |
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| Investments & Digital Assets | Balance | Loan amount |
|---|---|---|
| What is your current balance of your investment accounts? Examples shown: Stocks, bonds, other |
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| What is your current balance of your digital assets? |
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| Retirement Accounts | Balance | Loan amount |
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| What is your current balance of your retirement accounts? |
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| Life Insurance | Balance | Loan amount |
|---|---|---|
| What is the cash surrender value of your life insurance? |
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| Real Estate | Balance | Loan amount |
|---|---|---|
| What is the current value of your real estate property? |
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| Vehicle | Balance | Loan amount |
|---|---|---|
| What is the market value of your vehicle? |
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| What is the market value of your spouse's vehicle? |
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| Other Assets | Balance | Loan amount |
|---|---|---|
| What is the current value of your other assets? Examples: Boats, motorcycle, recreational vehicles, etc. |
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| Other Valuable Assets | Balance | Loan amount |
|---|---|---|
| What is the current value of your other assets? Examples: Jewelry, collections, artwork, business interests |
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| Business Assets | Balance | Loan amount |
|---|---|---|
| What is your current balance of any cash or money in a bank or online accounts of your business? |
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| What is the current value of your other business assets? |
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Let's review how money comes into your household. The IRS looks at total household income when reviewing collection options. Please enter average monthly amounts based on your current situation.
Your Income
Your Income
Other Household Income
Additional Income Sources
Let’s review your household expense. The IRS reviews household expenses using both actual amounts and published standards. You are responsible for determining the portion you personally pay."
Household Expenses
Your Payment Plan Estimate
Based on the information you entered, this estimator generated estimated installment agreement scenarios based on your inputs.
Estimated scenarios based on your inputs below:
Based off estimated net household income
Based off estimated net household income as adjusted by the IRS rules
*Estimates only! The IRS may calculate a different monthly payment agreement amount after reviewing your full financial documentation.
Here is a breakdown of the estimated monthly Payment Plan amounts per IRS guidelines
| Household Monthly Income | Household Monthly Expenses | Net Household Monthly Income | |
|---|---|---|---|
| “Full Pay” Plan (Based on your amounts) | $14,000 | ($12,665) | $1,335 |
| “Partial Pay” Plan (Based on IRS Amounts) | $14,000 | ($12,187) | $1,813 |
These estimates are based on standard IRS calculation methods using the information you provided. The IRS may calculate different amounts after reviewing full documentation.
Factors considered when qualifying for a Payment Plan with the IRS
| Net Household Monthly Income | Months until CSED Expiration | Federal Tax Liability | Totals | |
|---|---|---|---|---|
| Total Estimated Future Repayment | $1,335 | 48 | $64,080* | |
| Estimated Federal Tax Liability | $500,000 | $500,000* |
*If the estimated future repayment is equal to or greater than the federal tax liability (i.e. the taxpayer would pay off their tax liability before the statue of limitations expires on the collections statute expiration date (CSED), the IRS may consider this a Full Pay Payment Plan and not adjust the taxpayer’s amounts by their standards.
Your OIC Estimate
Awesome! Based on the information you entered, this tool generated estimated Offer-in-Compromise (OIC) scenarios for your review.
Estimated Offer scenarios based on your inputs below:
Lump Sum (12 Months)
Deferred Payment (24 months)
*Estimates only! The IRS may calculate a different reasonable collection potential after reviewing your full financial documentation.
Here is a breakdown of the estimated offer amounts per IRS guidelines:
| Estimated Net Assets | Estimated Net Household Income | Payment Term | Estimated Future Income (Net Household Income X Payment Term) |
Estimated Offer Amount (Net Assets + Future Income) |
|
|---|---|---|---|---|---|
| Option 1: Lump Sum | $35,600 | $1,813 | 12 | $21,756 | $57,356 |
| Option 2: Deferred | $35,600 | $1,813 | 24 | $43,512 | $79,112 |
These estimates are based on standard IRS calculation methods using the information you provided. The IRS may calculate different amounts after reviewing full documentation.
Factors considered when qualifying for an Offer in Compromise with the IRS
| Estimated Net Assets | Net Household Income | Months of Future Income | Federal Tax Liability | Totals | |
|---|---|---|---|---|---|
| Estimated Net assets | $35,600 | $35,600 | |||
| Estimated Future Income | $1,813 | 48 | $87,024 | ||
| Total Estimated Future Repayment | $122,624* | ||||
| Estimated Federal Tax Liability | $500,000 | $500,000* |
*If the amount that could be repaid by taxpayer above is equal to or greater than the amount of taxes owed to the IRS, the IRS may determine that an Offer in Compromise is not appropriate in this situation.
Detail of Assets, Income, Expenses and Amounts adjusted by the IRS Standards
| Assets | Your Ammount | IRS Ammount |
|---|---|---|
| Bank account balances | $5,000 | $4,000 |
| Stocks, bonds, other investments and digital assets | $9,000 | $9,000 |
| Digital Assets | $1,000 | $1,000 |
| Retirement account market value (401k, ira, etc.) | $8,000 | $6,200 |
| Cash value of life insurance policies | $5,000 | $5,200 |
| Home’s current equity | $100,000 | $0 |
| Taxpayer's vehicle equity | $7,000 | $1,950 |
| Spouse's vehicle equity | $5,000 | $350 |
| Other asset equity (boats, motorcycle, recreational vehicles, etc.) | $1,000 | $600 |
| Other valuable assets equity (artwork, collections, jewelry, items of value in safe deposit boxes, interests in a company or business that is not publicly traded, furniture & personal effects) | $14,500 | $0 |
| Business bank account and digital asset balances | $10,000 | $10,000 |
| Business assets equity | $9,000 | $0 |
| Total Assets | $170,000 | $33,000 |
| Income | Your Ammount | IRS Ammount |
|---|---|---|
| Total Household Monthly Income | $14,000 | $14,000 |
| Expenses | Your Ammount | IRS Ammount |
|---|---|---|
| Bank account balances | $5,000 | $4,000 |
| Stocks, bonds, other investments and digital assets | $9,000 | $9,000 |
| Digital Assets | $1,000 | $1,000 |
| Retirement account market value (401k, ira, etc.) | $8,000 | $6,200 |
| Cash value of life insurance policies | $5,000 | $5,200 |
| Home’s current equity | $100,000 | $0 |
| Taxpayer's vehicle equity | $7,000 | $1,950 |
| Spouse's vehicle equity | $5,000 | $350 |
| Other asset equity (boats, motorcycle, recreational vehicles, etc.) | $1,000 | $600 |
| Other valuable assets equity (artwork, collections, jewelry, items of value in safe deposit boxes, interests in a company or business that is not publicly traded, furniture & personal effects) | $14,500 | $0 |
| Business bank account and digital asset balances | $10,000 | $10,000 |
| Business assets equity | $9,000 | $0 |
| Total Household Expenses | $12,665 | $12,187 |
| Net Household Income | $1,135 | $1,813 |
Interest Calculator
See what your tax debt is costing you
You’re paying: $575 a Month in interest
You’re paying: $6,900 a Year in interest
We can help
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Tax Debt Tools Questions
Are the Tax Debt Tools really free?
Yes. The Pre-Check and the Estimator are free to use, with no account and no credit card. They’re a good first step before choosing a plan, so you can see which IRS options may fit your situation.
If the Pre-Check finds an issue, will I be stopped from continuing to the Estimator?
No. You can always continue to the Estimator and see your options.
But we strongly advise you to correct the issue before you file anything with the IRS, or to get help from a tax professional. Issues like unfiled tax returns can lead the IRS to reject or return a request, even when the numbers work.
Do I need to share my name or Social Security number?
No. The tools ask only about your household, income, expenses, assets and tax debt. They don’t ask for your name, your Social Security number or your IRS account details.
How accurate is the Estimator?
It uses the IRS Collection Financial Standards and published IRS guidelines, the same rules the IRS uses to measure what you can afford. Your estimate is only as accurate as the figures you enter, so use your real monthly amounts.
It’s an estimate, not a decision: only the IRS can approve a payment plan, an offer or a pause in collection, after reviewing your full documentation.
Can I save my results?
Yes. You can email yourself a PDF report, locked with a passcode shown on screen, or download it instead.
We don’t keep a copy of your report, so we can’t resend it. Keep the file somewhere private, because it contains your financial details.
What happens after I get my estimate?
If you’re ready to apply, continue in Turtle Tax. Your answers carry over, so you won’t start from scratch, and the app prepares your IRS forms and a cover letter.
If your situation is complicated, or the Pre-Check flagged something, you can talk to one of our independent Tax Pros instead.