The tax deadline is almost here. Are you facing the deadline wondering what to do because you owe more tax than you can afford to pay when you file? If so, the worst thing you can do is stick your head and the sand and ignore the deadline. Even you cannot pay what you owe, make sure to file on time. That way you won’t have a penalty for filing late. Here is what to do if you can’t pay all your taxes by the due date.
- File on time and pay as much as you can. You should file on time to avoid a late filing penalty. The penalties for filing a tax return late are worse than the penalties for paying the tax late. If you file late and pay late, you get hit with both penalties. When you file, pay as much as you can with your tax return. The more you can pay on time, the less interest and late payment penalty charges you will owe.
- Pay the rest of your tax as soon as you can. If it is possible, consider getting a loan or using a credit card to pay the balance. The interest and fees charged by a bank or credit card company may be less than the interest and penalties charged for late payment of tax.
- Use the Online Payment Agreement tool. You don’t need to wait for IRS to send you a bill to ask for an installment agreement. The best way is to use the Online Payment Agreement tool on IRS.gov. You can even set up a direct debit installment agreement. If you owe less than $50,000 and can pay monthly installments that pay the entire balance within seven years, you can quickly set up an installment plan online in most cases.
- Don’t ignore a tax bill. If you get a bill, don’t ignore it. The IRS may take collection action if you ignore the bill. If you have a relationship with a CPA, contact him or her immediately about an IRS notice to enlist the help and advice of a professional that deals with the IRS regularly. If you do not have a CPA, this may be a good time to consider engaging one. Problems with the IRS do not go away over time. If not taken care of, the problems just multiply.
In short, remember to file on time. Pay as much as you can by the tax deadline. Pay the rest as soon as you can. While you can get a pesky kid to stop bothering you by ignoring him, the IRS only gets worse when you try to ignore them.