With tax day fast approaching, it's time to get your ducks in a row and file your return. 🦆
If you have a hefty tax bill you can't pay, the best thing to do is hightail it out of town and head straight for the hills. 👋 Find a nice cozy cave and go off the grid. 🧙
That was a joke, OK?! 😅 Here's what you should really do if you can't afford to pay your taxes in full.
Here’s Five Fast Facts on how to pay your tax bill:
- 📑 Hurry, Don't Delay - If you know you can't pay your tax bill, make sure you still file by the tax deadline. Not filing could result in bigger penalties than not paying - who knew? The failure to pay penalty is 0.5% per month and failure to file is 5% per month (both max out at 25%). On top of that, if your tax return is over 60 days late, you'll get slapped with a fine of $435 or the equivalent of the balance of your taxes due, if it's less than that.
- 👩🏻💻 Time for a Game Plan - If you can't pay your tax bill in one lump sum, set up an IRS payment plan. If you owe less than $100,000 in taxes, you can choose a short-term payment plan that lets you pay off the debt in full within 6 months with no setup or application fees. If you owe less than $50,000 and can't pay it all off within six months, there's a long-term plan available that lets you pay it off within 6 years (fees apply). With any IRS payment plan, you'll accrue penalties and interest until the balance is paid in full.
- 💰 Sweet Relief - Tax payers in need of financial assistance may be eligible for hardship assistance. You may also be eligible to have your collection deadline temporarily delayed. Additionally, you could try your luck with an Offer in Compromise to settle your debts for less than you owe. It's tough to qualify, but maybe worth a shot if you've fallen on hard times.
- 💳 Charles in Charge - Although it shouldn't be your first choice, paying off your tax bill with a credit card might make sense. If you have a card with a 0% APR offer, you could potentially pay off your debt without accruing interest and penalties from the IRS. You could also consider taking out a personal loan to foot the bill. If you can get a rate lower than what the IRS offers, you could save in the long run.
- 💌 Ignorance Isn't Bliss - We all hate getting bullied by the government, but don't ignore Uncle Sam. If you fail to pay your taxes and don't set up an agreement with the IRS, you'll begin receiving letters that require you to take action. Ignoring these letters comes with consequences in the form of penalties and even jail time, so take care of business. If you need help, talk to a qualified tax accountant or attorney.
🔥Bottom line: Bonus fun fact: the three major credit bureaus (Experian, TransUnion, and Equifax) no longer include tax liens in your credit report. However, they're still available for creditors to see. No one gets away scot-free!
Did you do your taxes yet?
Let us know by connecting with us on Facebook and Instagram! Also, remember to share this newsletter with your friends & coworkers!
Btw, If you’ve read this far and haven’t yet signed up for the weekly Paycheckology newsletter, CLICK HERE!
