Relationship Between Back Taxes and Your Credit Score
Back taxes account for more than $125 billion in United States debt, with more than 11 million Americans owing back taxes. Two of the questions that many present to the Law Office of Max Benkel are: “Does a tax lien hurt your credit?” and “Is there a taxes credit score correlation?” Let’s answer both of those questions.
Do Back Taxes Affect Your Credit Score?
The good news is that it doesn’t affect your credit score if you owe back taxes. This is because credit reports don’t track tax bills that you may receive or the payments you make on them.
You are subject to a tax lien when you don’t pay your back taxes. This is when the government legally claims your property as part of the repayment. Just like simply owing back taxes, this doesn’t affect your credit score.
When we pay back money that we owe for credit cards, cars, mortgages, etc., our credit scores tend to rise. This is not the case with back taxes. Having tax bills and tax liens show up on your credit report is a practice that ended after 2017.
Other Downsides of Back Taxes
While your credit score won’t be affected, there are many other downsides to owing back taxes to the IRS. This includes:
- Forfeiture of tax return
- Interest charges
- Wage garnishment
- Seized assets
- Inability to travel abroad
- Penalty charges (up to 1%)
Atlanta Tax Attorneys Can Help
Atlanta tax attorneys like Max Benkel can help you navigate the complicated Internal Revenue Service and get you back to strong financial health. The Law Office of Max Benkel is an advocate for your interest and wants to make sure your assets are fully protected.
If you’re ready for help from the top Atlanta tax attorney, then give us a call today at (404) 845-0015.
