So, it’s time to file your taxes and you realize that you can’t afford to pay the IRS. This is a tough position to be in. For many, the answer to this problem is to hide from the IRS and hope that they do not come around for a long time. Unfortunately, this is never what you should be doing.
If you cannot afford to pay your tax bill, follow this advice. It can save you a lot of money in additional penalties and interest that you would receive if you did fail to file:
- File your taxes anyway. The last thing you want to do is pass by on filing your return because you know you cannot pay what you owe. This is not something that the IRS is going to look kindly upon – you must file no matter what. The harshest penalties that the IRS imposes is the failure to file penalty. The failure to pay penalty is much less than the failure to pay penalty.
- Pay what you can. Sure, it would be nice to pay your entire tax bill in full so that your account is in good standing with the IRS. The only problem is that you may not have enough money to make this happen. In this case, you should pay as much money as you can. Not only will this reduce your liability, but it will also show the IRS that you are trying your best to pay. It is better to pay less than what you owe than nothing at all.
- The IRS is willing to work with you. If you have a history of filing and paying on time the IRS will try to make things as easy on you as possible. For instance, if your tax bill is less than $25k you will probably qualify for an installment agreement. This allows you to pay your liability over many months, as opposed to all at once. But remember, you do not qualify for installment agreement unless you have filed your most recent return as well as subsequent ones from the past.
- You will not fall any further behind. If you do not file your taxes and neglect to pay you have two things going against you. But if you at least file the only problem you are facing is how to come up with the money that you owe. If you are having trouble coming up with the money to be you can be assured that there are many different tax settlement methods offered by the IRS. The IRS ensures they offer settlement methods that can accommodate just about any taxpayer with just about any type of financial situation.
- By paying as much as you can you may be able to avoid all or some penalties and interest. The longer you wait the more you will owe the IRS when you finally decide to come around. All penalties can be avoided if you set up some sort of agreement with the IRS prior to the taxes amount being due but you will always be liable for the interest that ads up on the outstanding tax amount.
If you do not understand your position and how to move forward, hire a tax professional. He can help you file your current tax return, as well as any you have missed in the past. Along with this, a professional knows what the IRS is looking for and can offer tips and advice on how to best deal with your situation in the future. At some point you will have to pay the IRS. It is always nice to have an expert on your side that can help you solve your problem while paying the least amount possible.
Related posts:
- What If I Didn’t File My Taxes or Request an Extension to File?
- What If You Didn’t File 2009 Taxes Going Into the 2010 Tax Season?
- What If I Didn’t File My Taxes by April 15th?
- 2010 Tax Filing Extension: Instructions & Forms to File IRS Extension
- Filing a 2011 Tax Extension: 2012 Deadline Dates & How to File
