The past year has been a rollercoaster ride for many U.S. citizens with markets moving up in the first half only to plummet in the second. As a result, many independently employed people, such as real estate investors, are sitting on a mountain of tax liability despite heavy losses. This tax debt can be difficult to deal with, but here are some tips on setting up payment plans and reducing the amount you owe.

There are five strategies to get out of your IRS problems:

1. Installment agreement: The IRS lets you setup a monthly payment plan for paying off the amount that you owe.
2. Partial payment installment agreement: The IRS recently setup a new program where you have a long-term payment plan to pay off the IRS at a reduced dollar amount.
3. Offer in compromise: The IRS has a program where you can settle your tax debts for less than what you owe if you make a lump sum payment or accept a short-term payment plan.
4. Not currently collectable: A program where the IRS voluntarily agrees not to collect on the tax debt for a year or so.
5. Filings bankruptcy: Tax debt can be eliminated under the strict rules of a Chapter 7 or Chapter 13 bankruptcy petition.
   

It is important to consider the long-term ramifications of any actions that you take. Payment plans put a financial burden on you going forward and may involve paying interest. Meanwhile, a bankruptcy may eliminate your debt, but it will also hurt your credit rating over the long-term. This could make it more difficult to get home or car loans in the future.