Some people might think that avoiding the IRS is good advice when it comes time to file your taxes, which of course would be a most inaccurate assumption. Rather than risk a potential legal issue with the IRS you should send in your tax forms on time, even if you don’t have the funds to pay the amount due.
The most important thing you can do to avoid serious legal repercussions is file your tax forms regardless of whether you can pay. The penalty for not paying your tax bill is far less severe than the consequences of failing to file. It is going to make your life a lot easier if you file straight away even if you don’t have the funds available to immediately pay off what you owe.
If you are above a certain income level, hiring Affordable Tax Prep and Bookkeeping Service could pay off. A tax professional will comb through your finances and find every possible deductible item. You might find that with their help, you owe a lot less than what you had calculated.
Borrowing money from a trusted individual or taking out a bank loan (if you have a good credit score) are choices to consider, but the IRS also has payment options that you may not be aware of.
It’s Never as Bad as You Think
The good news is that if you can’t afford the full amount that is due there are alternatives to paying everything all at once. The IRS offers you 120 days to pay off what you owe, but keep in mind this will add interest charges to your bill.
You can also make monthly payments by asking for an installment agreement. This requires some extra paper work and a small fee, but may be the best option for many who simply don’t have the money. The IRS has made great strides in the affordability and ease of the process, and anyone making less than $50k a year can apply. An “offer in compromise” (settling with the IRS to pay less than the total amount due) may also be possible if you meet the right criterion.
If All Else Fails
What if the installment agreement or an offer in compromise is still not affordable? The IRS does occasionally agree to change the status of a person’s tax debt to “currently not collectable”. With this special status the debt and interest from your taxes will not go away, but your account will be protected from legal actions.
Consider Your Options Carefully
Before you make the decision to just sweep anything you might owe the US Treasury under the rug, carefully consider the consequences. When you realize that not filing your taxes is a fear-based decision and that you do have options, things start to feel a little easier.
Find an Affordable Tax Prep and Bookkeeping office in your area and ensure your tax bill is as low as possible. Work out a payment plan with the IRS. But, whatever you choose to do, file your tax forms on time.