Taxes Too Much? Read These Pro Tips Before You Panic
(RepublicanPress.org) – Tax time in the United States comes around every year in mid-April, but many start their calculations at the turn of the new year. If you find that you owe money to the Internal Revenue Service (IRS) and you can’t afford the bill, there are a few ways you can arrange payments.
Completing your taxes sooner rather than later can help take the sting out of a possible tax bill by allowing as much time as possible to save up and pay. Even then, there might not be enough time or extra money to save. So, what do you do?
Contact Them First
The last thing you want to do is have an outstanding obligation to the IRS. Not only can you get into legal trouble, but garnishments of your income can follow. That’s why it’s best to contact the IRS first to work out a plan and pay the taxes owed. Although these options won’t help you to avoid interest and penalties, at least it will lessen the stress of carrying an outstanding obligation with the government and any trouble that may result.
Those who can’t pay right away can apply for either a short-term or long-term payment plan, depending on the overall tax bill amount. It’s free to apply online for the short-term option, free to set up, and the organization spreads the payments over a maximum of 180 days. If that timeframe or payment amount doesn’t work for you, the longer-term plan allows you more time to pay the tax bill. One thing to keep in mind is there is a fee to apply and set up the long-term option, although the IRS may waive part of the fee for low-income individuals. Also, remember that penalties and interest still accrue for both plans.
Another option is to apply for an Offer in Compromise (OIC), which allows the taxpayer to settle their debt for less than they owe. You can submit an application and include an amount you think is reasonable to pay based on your income. The IRS provides a booklet to help with the calculation. The agency will then decide if they are willing to accept the offer and settle your tax debt. There is a fee to apply for this option, but no guarantee the IRS will accept the offer.
The final option is to temporarily delay the IRS collection process. If the taxpayer can prove they cannot pay the debt to the IRS at the present time, the organization may grant a delay. However, that doesn’t mean the debt no longer needs to be paid. It still accumulates interest and penalties until the taxpayer pays the obligation in full.
Tax Time Obligations
Of course, the best option is to pay your tax debt right away, but sometimes that isn’t an option. If you can’t borrow the money to pay your tax debt, consider contacting the IRS as soon as possible to make payment arrangements or get a temporary waiver. Going forward, think about setting money aside each month in anticipation of a year-end tax bill. Although owing money to the IRS isn’t ideal, now you know the organization has payment options for you to consider.
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