As the taxman cometh, a good number of folks find themselves in a pickle, unable to cough up the dough for their taxes. This can happen for a slew of reasons, like unexpected bills, losing your job, or a dip in income. In this piece, we’re going to chew the fat about what happens when you can’t pay your taxes and offer some advice on how to steer through this sticky wicket.
Understanding the Fallout
Dodging your taxes can lead to some serious fallout that goes beyond just owing Uncle Sam some greenbacks. Here are some potential repercussions you might face:
- Interest and penalties: If you don’t settle your taxes on time, you might find yourself on the hook for interest charges and penalties that pile up over time.
- Wage garnishment: The IRS can dip into your paycheck if you’re in arrears on your taxes.
- Asset seizure: If you don’t square things with the IRS, they might seize assets like your bank account or property to settle your outstanding tax debt.
- Ruined credit score: Unpaid taxes can take a toll on your credit score and throw a wrench in your future borrowing plans.
What Moves You Can Make
If you’re up against the wall and can’t pay your taxes by the deadline or need more time, here are some moves that could help you out:
1) Apply for an installment agreement with the IRS: This lets taxpayers who can’t afford to pay their entire tax debt upfront make regular payments until it’s paid in full.
2) File for an offer-in-compromise (OIC): This is another option where eligible taxpayers can settle their debt for less than they owe if they meet specific criteria.
3) Seek professional assistance: Consider hiring a seasoned tax pro who’s a whiz at resolving knotty issues related to unpaid tax balance, like a CPA from outfits such as H&R Block or Jackson Hewitt.
4) Review state-level relief options: Some states also offer payment plans which help folks not only agree upon a payment amount but also waive penalties and interest.
When it comes to unpaid taxes, there are ways to handle the situation. It’s crucial that you spring into action as soon as possible to dodge further negative fallout. Reach out for help from pros or seek financial assistance so you can get your finances back on track before the taxman cometh again.
By following these tips, you can get a handle on what happens when you can’t pay your taxes and how to navigate this tricky situation while minimizing its impact. Remember, settling up on time is always the best route, but if that’s not doable, then follow the other steps we’ve mentioned to stay on top of this seemingly insurmountable issue related to unpaid tax balance.