T is for Tax Time

 

 

It’s tax time.  Do you owe a large sum of money?  Do you have the means to pay it off? The realization that you can’t pay your taxes can make you feel uneasy, but don’t worry; there are some actions you can take to remedy the situation.

                       Here are a few tips:

Be sure to send in your return, even if you don’t have enough money to pay the taxes due.  The penalty for filing late is much more severe than paying late.  So, no matter what the situation, don’t put off filing by the deadline.

  • It is best to pay the taxes you owe in full on the deadline, but there are situations when you need extra time for the money to be available. If this is the case, you can file for an extension. This will allow you to have more time to pay off your taxes.
  • If the money is not available the government, just like anyone else, would rather get the money over a period of time as opposed to not at all. They have an installment plan available when you can’t pay in full. To request an installment plan, you should use Form 9465. You can even set this plan up as a direct debit from a bank account to making this process easier.
  • So, you can’t find the money, and you can’t even get on an installment plan, what are your options? A final option offered by the IRS is called an Offer in Compromise. This process requires you to submit a complete personal financial statement and an application fee of $150 in addition to Form 656.  Keep in mind that this option is only for extreme circumstances.
  • These offers are evaluated on a case-by-case basis, and you may or may not be approved. If the IRS determines that you are unable to pay the amount in full, the offer may be accepted.
  • Paying the taxes you owe is imperative.  It is vital that you explore all of your options and avoid penalties.

This information is not intended to be a substitute for specific individualized tax advice.  We suggest that you discuss your specific tax issues with a qualified tax advisor.

Answers from AZ

 

About Ann Zuraw

Ann Zuraw, the voice behind "Chicks, Chat and Change", is a Certified Financial Planner (CFP®), Chartered Financial Analyst (CFA®), and Certified Divorce Financial Analyst (CDFA™).If you have comments on this post contact Ann Zuraw

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