As we’re all aware, this decade’s Great Recession has dealt, and continues to deal, a significant blow to the budgets of many American families, leaving millions in debt, underwater in their mortgages, and looking for any means necessary to get back on a financially-healthy course.
Now, tax time is yielding another short-term problems for some cash-strapped citizens.
With tax deadlines just a few weeks away, tens of millions of taxpayers will owe the government. If you're one of those taxpayers who owes in 2011 for the income of 2010, and find you cant pay, here are five tips to file away for your reference:
1. File Your Taxes Anyway
Never listen to advice from people telling you not to file your taxes, including all income. According to the financial experts at WalletPop, “the IRS can issue two types of penalties: failure to file and failure to pay. If you make the effort to file on time, you've solved half your problem.” Send in your taxes by the April 15th deadline and avoid, at least initial, IRS punishments.
2. Pay as Much as You Can Afford, As Soon As You Can
It’s important to understand that penalties and interest can accumulate on any outstanding tax balance. As a result, the more you pay up front, the less you’ll owe over the long run. In short, do what you can to pay more as much as you can with your filing.
3. Consider Other Forms of Payment
Most people are aware that the IRS accepts checks and money orders in addition to electronic debit option. But a simple phone call to the IRS also reveals that they take credit cards. While there are hundreds of reasons not to use plastic to pay certain bills, it’s important to balance the interest on your cards with the interest AND IRS penalties that come from paying taxes late. But that’s not the only alternative method. According to WalletPop, “Additionally, if you have another source of funds available, such as a line of credit or home loan, it might be a good choice to use those rather than pay interest and penalty to the IRS (this isn't always the case and depends on your own financial situation).”
4. Enter Into an Installment Agreement
The IRS also offers an installment plan that allows you to pay your owed taxes over time. In order to request this type of installment agreement, you must call the toll free number on your bill or complete a federal form 9465, Installment Agreement Request. If your total tax owed is less than $25,000, you can also apply for an installment agreement online. Keep in mind that there's a fee for this service and you must make timely payments and file your tax returns in a timely manner.
5. Remember, Bankruptcy can discharge some or all of your taxes
Depending on when your taxes were incurred, some (or all) of the taxes might be completely dischargeable in bankruptcy. That means, just like your credit card debt, it can be wiped out under the powerful provisions of the bankruptcy code. Even if the tax debt is not dischargeable, a Chapter 13 plan can help you structure an affordable repayment plan, often on terms much more favorable than the IRS can offer.
And remember, if you’ve been effected by the economy and are wondering how to free up more money to pay your taxes, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-919-646-2654, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.