True! If you are on a payment plan with the IRS, this will not affect your credit score. There are millions and millions of Americans on payment plans with the IRS.
Now I must say, if you can avoid a payment plan and pay your taxes timely, that is ofcourse the very best scenario. Having been a tax advisor for 25 years now, many many of my business owners struggle to pay their taxes in full every year and so I recommend a payment plan in this scenario.
The IRS uses market rate interest rates on the outstanding balance and these are usually much lower than a credit card or personal loan. The IRS is also extremely reasonable about how much you can afford to pay.
So, if you owe money to the IRS for 2021 and have not yet paid, please don’t use a credit card or a personal loan. Rather, I recommend you contact the IRS and request a payment plan. For amounts below $25,000, its as simple as completing one online form. You can do this! The very worst strategy is to ignore the debt, ignore the IRS notices, end up in tax court and then yes, your credit does get affected.
And another note on credit scores, starting in July, all medical debt that has been paid will be removed from all 3 credit agencies reporting files. In additiona, new medical debt will not show up on your credit report until a year after the debt is incurred.
Finally, we are starting to see some changes to the credit scoring systems!
For additional assistance with IRS debt, please reach out to us athttps://wendybarlin.com AND remember our TRAVEL TAX DEDUCTIONS workshop next week, Thursday May 26th at noon EST. Sign up at http://wendybarlin.com/travel