Does IRS debt affect FICO or show up on credit reports?

[700WannaB]

I have IRS debt that I cannot pay until I am done with training in 2 years. They have kept my tax returns for the past 3 years. I don't have credit card debt but this IRS monstrosity is threatening my attempts to improve my credit by wiping me out utterly.

[MarineVietVet]

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@700WannaB wrote:

I have IRS debt that I cannot pay until I am done with training in 2 years. They have kept my tax returns for the past 3 years. I don't have credit card debt but this IRS monstrosity is threatening my attempts to improve my credit by wiping me out utterly.

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Welcome to the forums.

I've owed the IRS money at different times and have always been offered a repayment plan at very low interest. Have you looked into this? 

[llecs]

Ditto to Marinevietvet. While debts to the IRS don't report, the IRS can opt for a tax lien and that can report. Liens are scored on par with judgments, bankruptcies, etc. Definitely call them and work out some sort of an agreement. You'll save money and you'll prevent a lien. BTW, tax liens report for 7 yrs from the date from the date you pay the debt in full. So, if you make your last payment 3 yrs from now, and they just now start reporting, then it will be 10 yrs before it comes off your credit. Liens are very difficult to get removed.

Good news is that the IRS will work with you. They are very flexible. A few years ago, I failed to plan for a $20,000 tax bill and failed to save money for Apr. 15. I ignored them for a while and threw whatever I could from time to time. Unfortunately, the interest and penalties compounded faster than I made payments and went backwards in a hurry. Once I talked to them, and with a super low and reasonable payment schedule, I was able to stop the penalties and had the interest reduced. As I earned extra money, I threw it at it and paid it off within 2-3 yrs. Had I not done that, I'd owe over $20k today and I'd have a lien, because I know that I'd lack the discipline to make those payments.

Figure out ways to increase your income and decrease your expenses. Get on a written budget. If in training now, then start working part-time somewhere. Min. wage for 20 hrs per week will earn you about $500 monthly after taxes. Sell off any assets, especially any useless junk that you don't want or need anymore. If earning any income via a W-2, and you received a refund last year, then adjust your W-4 to pay less taxes on your paycheck and put that towards a payment plan with the IRS. Do the same for state if applicable. Cut any expenses you don't want or need like hobbies, extra phone (if you have both a cell and landline), cable, subscriptions, eating out, etc. In short, figure out where the money goes.

[daisyduke]

I too owe the IRS some money from a tax return from like 2003 - for a 1099 side job I was doing and sold a ton of stock that year. Somehow in 2005 they said I owed them money. I don't know. But I know one thing - never mess with Uncle Sam.

Call em - make payment arrangements. they'll do it automatically for $100 (that is their absolute min) a month. You can pick the date you'd like the withdrawal to happen, consistently...

I fell behind on my payments....then in April I started to clean up my credit...I called them...they said Ms. XX, we have not heard from you in a while...that's ok, you're calling today to take care of this, we appreciate it....boom, signed up for auto debit, had to make three months worth of payments to them before the auto debit came through.  I wanted to prevent any kind of neg. reporting info on my credit report AND i never want my actual pay to get garnished. I would be embarresed if that happened at my job....small company....everyone in the lunchroom would know about it...and my boss would know as well...ugh...

hope this helps...good luck