As tax season rolls around, many Americans may find themselves struggling to pay their taxes in full. While it is always best to pay your taxes on time and in full, there are options available if you can’t afford to do so. Here’s a guide on what you can do if you are unable to pay your taxes:
File Your Taxes Anyway
Even if you cannot afford to pay the total amount of taxes owed, it is still important that you file your tax return on time. Failing to file could result in costly penalties and interest charges. The IRS offers payment plans and other options for those who cannot afford their tax bill.
Negotiate a Payment Plan
If you are unable to pay your taxes in full upfront, the IRS offers payment plan options that allow taxpayers to make monthly payments over time until the balance is paid off. However, keep in mind that interest and fees will continue accruing during this time, increasing the overall cost of the debt.
Installment Agreements
The most common payment plan option offered by the IRS is an installment agreement which allows taxpayers with balances up to $50k (including penalties and interest) 120 days or less instead of five months.
Offers In Compromise
Depending on one’s financial status and how much they owe,
they might qualify for an Offer In Compromise(OIC).
It amounts negotiated between a taxpayer and the government
for significantly lesser than what was originally demanded.
However not everyone qualifies as it requires meeting certain criteria such as proving reasonable cause or being able prove extreme hardship request.
Consider Other Options
If negotiating with Internal Revenue Service(IRS) fails,
taxpayers can turn towards borrowing from banks or liquidating assets like selling stocks,bonds ,real estate etc
to cover unpaid balance.Filing consumer proposal or bankruptcy depending upon situation from credit counselling agencies is another option as well.
Conclusion
If you can’t pay your taxes on time, don’t panic. The IRS offers options that allow taxpayers to pay over time or negotiate with them and these programs are available for those who qualify. Contact the IRS directly or consult with a tax professional to determine which option is best for you. Remember that ignoring your taxes could lead to serious consequences in the long run, so it’s better to face the issue and take action now.
FAQs
What happens if I can’t pay my taxes by the deadline?
If you can’t pay your taxes in full by the deadline, you should still file your tax return to avoid penalties for failing to file. You will then need to work out a payment plan or other arrangement with the IRS. Late payment penalties and interest may apply, so it’s best to address the issue as soon as possible.
What options do I have for paying my taxes if I can’t afford them all at once?
If you can’t afford to pay your taxes in full when they’re due, consider setting up an installment agreement with the IRS. This allows you to make monthly payments over time until your balance is paid off. Alternatively, you may qualify for an offer in compromise or hardship relief program that could reduce or eliminate part of your tax debt.
Will I face legal action if I am unable to pay my taxes on time?
If you cannot pay your taxes on time and don’t reach a payment agreement with the IRS within a reasonable amount of time, they may take more aggressive actions such as placing liens on property or seizing bank accounts and other assets through wage garnishments and levies against bank accounts and wages.. It’s important to communicate openly with the IRS about any financial difficulties you’re facing so that alternative arrangements can be made before taking these sorts of drastic measures.
