If you find yourself in a situation where you are unable to pay your tax bill in full on time, the following options will be helpful.
1-File on time and pay as much as you can. File on time to avoid a late filing penalty. Pay as much as you can to reduce interest charges and a late payment penalty. You can pay online, by phone, or by check or money order. Visit IRS.gov for electronic payment options.
2-Get a loan or use a credit card to pay your tax. The interest and fees charged by a bank or credit card company may be less than the IRS interest and penalties. For credit card options, visit IRS.gov.
3-Borrow from a family member, friend or co-worker. It is always possible to ask someone you know to lend you the money to pay your tax bill. To protect all parties, have a formal written loan agreement prepared to avoid potential problems in the future.
4-Use the IRS Online Payment Tool. You don't need to wait for the IRS to send you a bill before you ask for a payment plan. You can use the IRS Online Payment Agreement tool at IRS.gov. You can even set up a direct debit agreement. With this type of payment plan, you won't have write a check and mail it each month. It also means you won't miss payments that could lead to more penalties and interest charges.
5-File Form 9465, Installment Agreement Request, with your Tax Return. File you tax return on time along with Form 9465 to set up a monthly payment plan with the IRS.
Don't ignore a tax bill. The IRS may take collection action if you ignore your bill. Penalties and interest charges will continue to accrue until your tax bill is paid in full. Contact the IRS right away to talk about your options. If you a suffering a hardship, the IRS will work with you.
This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net