Not having the money to pay your taxes can be frustrating and frightening. What can you do? These tips will help you to generate the cash to help with IRS Debt.
Looking for help with IRS debt? You’ve come to the right place.
No form of debt is desirable, but owing money to the Internal Revenue Service can be frustrating, if not downright scary. The reality is that the IRS has much more power to make your life difficult if you can’t come up with their money than other debtors do.
Fortunately, getting help if you can’t pay your taxes is possible. There are things you can do to work through this situation and get your head above water.
This guide will teach you how.
Don’t Avoid the Problem
If there’s one thing the IRS does not like, it’s being ignored. They are far more likely to work with you if you are upfront about the problem and make it clear that you have no money to pay taxes.
Most importantly, keep filing your taxes even if you know you can’t pay. Owing money is more common than you may think, especially since the COVID-19 pandemic.
In fact, about 1 in 5 people thought they owed tax money in 2020.
The IRS is far more likely to cut you some slack if you file your documents. You’re also less likely to draw attention and get audited, which could result in you owing more money.
There is an additional penalty on top of what you owe for not filing. So you’re really shooting yourself in the foot even more if you don’t file your taxes.
File an Extension First
Filing an extension with the IRS gives you extra time to work through your tax issues. Unfortunately, it doesn’t halt when your payment is due—the date never changes from “by April 15″—but it can still be helpful.
Also, be sure to look into IRS payment extension alternatives. There are several different ways to work around the issue if you owe and can’t pay. In some cases, you may be able to settle your debt for less than the amount you owe.
Be Aware of the Penalties
Not paying your taxes on time or avoiding the IRS can cost you money. In fact, you’ll most likely have to pay a penalty for doing either.
Penalties from the IRS can range widely. In some cases, they’ll tack a small amount of money onto the principal balance as a late fee. In others, they can garnish your wages or put a lien on your house until taxes are paid.
The standard payment for underpayment is 3.398% of the amount owed. However, paying by April 15 can sometimes reduce this number.
Make Sure Your Numbers Are Right
Plenty of free and cheap tax software exists nowadays. They’re generally easy to use, but even a few numbers entered wrong could drastically change your tax return.
Before panicking or brainstorming how to pay your taxes, make sure you have your numbers right. Run them into a comparable software (i.e. if you used Turbotax try H&R Block) or hire a tax professional.
If you’re low on cash, hiring an accountant might be a stretch. In that case, look into local colleges or programs where future tax professionals might be able to help you for free or at a reduced rate.
Get on a Monthly Installment Plan
In all likelihood, the IRS will put you on a monthly installment plan. Since you can’t come up with the cash right now, this is pretty much the best thing they can do.
This step is best if you think you’ll eventually be able to catch up. Maybe you got behind due to Coronavirus or just overestimated how much you would owe, and are a few hundred or thousand dollars behind.
In this case, you can probably have them paid back in under a year.
To make this happen, go to the IRS website and fill out their payment plan application. It will take some time before you know if it’s accepted or not. But being proactive is always a better option than avoiding the situation.
Most installment plans are short-term in length. You’ll have approximately 120 days to pay back what you owe.
Get a Loan
Owing the IRS money is no joke. Depending on how much you owe and how far you’re behind, they might:
- File a federal tax lien
- Seize your home
- Make you forfeit your tax return
- Garnish your wages
- File charges against you
- Revoke your passport
In some cases, getting help with IRS debt may mean taking out a loan.
Sure, it’s maybe not the best option to pay one debt with another debt. But at least you can get the entity with the most power to make your life difficult off your back.
And even with bad credit, you might still be able to get a loan that saves you money. (In fact, a personal loan could help you build your credit back up if you pay on time.)
A moderate interest rate on a personal loan might cost less than the late penalties you face by not paying on time.
Getting Help With IRS Debt
Getting help with IRS debt can be overwhelming and nerve-wracking. But falling behind is more common than you might think, and you do have options.
First, be sure your numbers are right. Also, be proactive about the issue. The last thing you want to do is make it look like you’re intentionally hiding things from the IRS.
From there, look to work out an installment plan with the IRS or get a loan on the side. Taking on debt to pay a debt isn’t the perfect solution, but it’s much better than some of the other consequences you could face.
Learn more about our installment loan options today and see if you can find one that’s right for you!