A lot of veterans end up having a tax issue for various reasons: cancellation of debt, cashing out retirement accounts, being self-employed, and a host of other reasons.
If you are a veteran, collecting a retirement or disability check will be calculated often as more available income you have to pay off the IRS. However, if you are only collecting disability or retirement, often that is low enough that you can get a settlement in the form of an Offer In Compromise.
These are the options you have:
- If you owe under $50,000, you can spread out the amount due over 72 months into monthly payments with a lien.
- If you owe over $50,000, the IRS is going to require a financial statement and most likely will file a lien against you.
- No matter how much you owe, you might qualify for an Offer In Compromise to settle the whole debt for a lot less. This is always the preferred option.
The IRS reserves the right to file a lien while an Offer In Compromise is pending, although most of the time they do not.
If you are collecting veterans’ disability benefits and nothing else, most of the time you will qualify for an Offer In Compromise. You can see our Offer In Compromise Guide here if you wish to self prepare it.