Can’t Pay Your Taxes in Full? These Are Your Options
A looming tax bill can be extremely stressful. You know that you owe taxes this year and realize that not paying means stiff interest and penalties. Your credit cards are maxed out so you cannot put the amount you owe on a credit card, so what do you do? Fortunately, the IRS understands that there are instances in which taxpayers need options if they are unable to pay their tax bills in full by the April 15th deadline. Read on for options that might be available to you.
- File an Extension: If you are worried that you cannot pay your taxes by April 15th, the first thing that you should do is file an extension. Interestingly, the IRS yields much harsher penalties on individuals who do not file at all than on individuals who file an extension and cannot pay in full. So, filing an extension even if you cannot pay your entire bill is your best bet. You should also consider making a partial payment (if possible) at this time so that your interest and penalties are minimized.
- Installment Agreements: If you are not able to pay your total tax bill at once and are looking for an option that might allow you to pay over time, an installment agreement might be the answer you are looking for. Much like a credit card, an installment agreement is designed to allow you to make a pre-determined payment each month. You should know that you will still be charged interest and penalties on your balance after April 15th, but this is a very nice way to manage a large tax bill. There are restrictions and an application process (which costs just over $100). If the IRS agrees to this plan, they will send you all the details that you need to move forward.
- Offer in compromise: If you have a financial hardship and are not able to pay your tax bill at all, you may be able to settle your debt for less than what you owe the IRS. An offer in compromise allows you to make a request to the IRS to settle your debt for less than you owe. This is most often granted as a result of significant financial hardship and settling the debt is the only viable option for the IRS to get any of the money they are due. There is an extensive application process for this and it can be fairly complicated. The IRS encourages you to explore other payment options before applying for an offer in compromise.
The IRS has developed programs to help taxpayers take care of their tax bill if you are unable to pay in full. The application processes for these programs can be complicated and tedious and you may decide you want to seek the help of a tax firm to review your return and help determine if you possibly owe less than you think. Success Tax Relief can also help with filing an extension, an installment agreement or an offer in compromise. Teaming with Success Tax Relief will improve your chances of getting IRS approval. Contact us today for more information!