If you know you won’t be able to afford to pay the income taxes you owe in full this year, you might be starting to panic as tax season approaches.
As we all know, failing to pay taxes can result in significant fines as well as criminal charges, so it’s smart to get a plan in place now. The good news is that there are options available for people in your situation.
These options from the IRS help you to avoid the interest and penalties that are normally associated with failing to pay the taxes you owe. They include:
Apply for an installment payment agreement. If you already know you won’t be able to pay what you owe, you can request a payment agreement before you receive a bill from the IRS. You can make the request on the IRS’s website or by submitting an IRS Form 9465-FS with your return.
Ask for additional time to pay. If you just need more time to acquire the money you owe, you may want to ask the IRS for an extension by submitting IRS form 1127-A. If you qualify, you can have the late payment penalty waived as part of the IRS Fresh Start Initiative.
Consider applying for a loan or putting the dues on a credit card. While this might not sound like a very appealing option, it is better than not paying and then ending up in trouble with the IRS and facing fines.
At the very least, pay what you can afford. Filing a tax return on time and paying what you can afford to pay will eliminate the late filing penalty, reduce the late payment penalty and cut down the interest charges.
Work with an attorney who can help. An experienced tax attorney can help you find a solution with the IRS. Working with the IRS can be intimidating and confusing, but a having an attorney on your side can make all of the difference.