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What To Do If You Can't Pay Your Taxes

The April 15th deadline for paying your taxes is upon us, and are you left wondering what to do if you can’t pay your taxes? If you owe the IRS more money than what you currently have available, don’t worry because there are options. You will certainly want to make arrangements to pay them now, rather than wait and have them come after your wages later. If you wait for them to start garnishing your paychecks then chances are that they are going to leave you a lot less money to live off of then you actually need, and your problems will become worse.

What To Do If You Can’t Pay Your Taxes

The very first thing to do is go over your taxes again, and make sure that you did not miss any steps or possible deductions, as these might help lower your tax bill to the IRS. Be sure to check this link to make sure that you didn’t miss any qualifying credits or deductions. It may even be worth paying a professional to do your taxes for you if you owe a lot of money. The tax professional may be able to help you accurately prepare your return. Hopefully the extra money spent on preparation will assist you by finding things in your favor that you missed. Also, be sure to ask about tax advice for this year, so that you do not have yourself setup for the same headache again next year. It is probably advisable to nip this in the bud early.

Second, get ready to file for an extension. This will give you until October 15th before you will need to file your taxes. You will need to estimate your tax liability on the form and begin making payments towards your estimated amount due. At least by breaking this amount up over a longer period of time, you can more manageably pay back the IRS the money that you owe.  The IRS even allows you to file an extension for free if you setup electronic payments. This will help insure that you do not miss the payments, and so that IRS feels that they are pretty mus guaranteed to get their money in a timely manner.

Normally by filing an extension you are going to be subject to a 0.5% monthly penalty on the amount due. If you choose to simply avoid filing an extension at all the penalties are stiff. This will add up quickly if you do not pay it off soon. We are not talking about a 5% annual percentage rate (10 times the normal penalty rate), we are definitely talking monthly if you choose not to file your taxes or an extension. By doing the Free Electronic File with automatic payments you will be saving yourself a lot of money comparatively.

So don’t be scared, as the IRS is willing to work with you. After all, it is easier on them of you just make these arrangements rather than force them to take legal action against you. If you owe the IRS even more money than most people they can even set up arrangements for you to pay them off over a 72 month period. While this is not the most desirable situation for most tax payers, it is better than being taken to court and having your wages garnished.