What Do I Do If I Can’t Pay The Taxes I Owe?
Every year, millions of Americans are faced with pondering a very serious question: “What can I do if I can’t pay the taxes I owe?” The stress of paying annual taxes is very real.
According to the IRS’ most recent data, Americans owed more than $114 in back taxes and related interest or penalties in 2020. And each year, more Americans fall behind on their taxes or underreport their income or the amount of taxes they owe.
Usually, it’s because of a simple mistake or a late tax filing. Here’s what you can do if you’re looking at your tax filing and asking yourself “What should I do if I can’t pay taxes I owe this year?”
Here’s What To Do If You Can’t Pay The Taxes You Owe
1. File Your Taxes On Time
Even if you know you cannot pay what you owe, you will likely owe even more if you don’t file your taxes on time. No matter your income, if you decide to not pay your taxes, interest will be charged on what you owe by the IRS.
Even if you can’t pay it all, at least pay a part of your taxes. There’s always an option for taxpayers to not pay everything they owe all at once. That way, you’ll be able to decrease the amount of interest applied to the overall amount you owe.
2. Ask For An Extension
An extension gives you more time to file your taxes, but it does not give you more time to pay them. Still, an extension helps you complete the vital step of filing on time by tax day. A delay of a few months may also help you cover more of your taxes if you can earn extra cash or dedicate more to your savings within the extension period.
3. Work With The IRS On A Payment Plan
You can easily set up a payment plan with the IRS that lets you pay what you owe over a set period with regular installments. Once you agree to a plan, typically paying monthly, you must stick to the IRS terms. Usually, taxpayers are allowed to cover what they owe in installments over 72 months at the most.
You cannot pay less than what you owe each month, but you can pay extra. Such installment plans come with fees, usually some penalty charges and interest, and using a credit or debit card for your payments may include processing fees.
4. Try To Delay Tax Collection
Another option is applying for a “currently not collectible” status, which means the IRS temporarily delays tax collection until you improve your financial situation. There’s paperwork involved, and you need to provide a lot of information about your income, expenses, and other assets. The IRS may also file a lien on you if you’re granted such a status.
5. Dip Into Savings
You likely didn’t start a savings account to use it to pay your taxes, but if you have an emergency fund, owing taxes is a good reason to use it. You may also consider “borrowing” from other types of accounts you hold, including a 401(k).
6. Offer In Compromise
An IRS offer in compromise, or OIC, may be an option. They are not easy to obtain, but if you’re successful, the IRS will accept a payment of less than what you fully owe. It has a long application to fill out and a lot of restrictions, including making monthly payments for as long as two years. Sometimes, the IRS even cancels an OIC, especially if you can’t make the payments.
7. Get A Paycheck Advance
If you qualify for a paycheck advance, you can receive up to $500 at Fast Payday Loans of Kentucky, LLC. to help with any type of financial emergency, including a pressing tax bill that can impact everything from paying rent to paying other vital bills.
Designed as a short-term loan to address a temporary financial emergency, a paycheck advance has very few requirements. You need a driver’s license or state-issued I.D., a blank check from a checking account in your name this is active, and your most recent pay stub.
The in-person paycheck advance process takes as little as 30 minutes. The best part: You receive your money the same day or the next business day. Start online by filling out the short paycheck advance inquiry form, and one of our loan representatives will be happy to guide you through the rest of the easy process.
Get Started Today
If you’re asking yourself the tough question of, “What can I do if I can’t pay taxes I owe,” a Kentucky paycheck advance is a quick and easy option for relief. Just go online, give us a call, or visit a Fast Payday Loans of Kentucky, LLC location near you today.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.