Don’t Have the Funds to Pay Your Taxes? 5 Things You Can Do:
50% of Americans owe taxes at the end of the year.
If this is you, we understand your worry and panic. Whatever you do, it’s important to not allow those emotions to overrule your judgment, causing you to make a decision that will make it worse. This is the time to take a deep breath and consider these five options available to you:
1. Put it on your credit card.
While this does nothing to eliminate your debt, it does take the pressure off if your inability to pay is a timing issue. Also, the interest rates on your credit card might be a lot lower than those levied by the IRS, which could save you a lot of money in the long run.
2. Refinance your home.
This option makes sense if you have any equity, that way you can use that equity to resolve your outstanding tax debt. Unlike with credit card or IRS interest, you can deduct your mortgage interest on your income taxes if you itemize. However, only refinance if you’re absolutely sure that you can afford it.
3. Enter into an installment agreement.
This is probably the best and easiest option – anyone can use if they owe less than $50,000 in combined income tax, interest and penalties, and so long as they’re current on all of their returns. However, like with credit cards, if you miss a payment – or are even a few days late – penalties will accrue, and they are HIGH. If you use this option, be sure that you are committed to making all of your payments on time.
4. Consider an Offer in Compromise (OIC).
An OIC lets you pay less than you owe, but this is only available if you meet a number of requirements. The IRS will take the following into consideration before granting you an OIC: your ability to pay; income; expenses; and asset equity. Generally, the IRS will only agree to an OIC if they determine they won’t be able to collect the full amount within a given time frame.
5. Simply ask for more time.
If you need more time, ask for it. You can request more time using the Online Payment Agreement Application or by calling the number provided. If your circumstances allow it, you’ll be granted an additional 60-120 days to pay off your taxes.
Help is always available so before you panic, take a deep breath and call us. We’ll see you through the initial stages of panic and help you decide on the option that’s best for you. Call us today at 877-254-4254 or visit http://www.irsallstar.com/our-services#9 to see how we can help.