What Do I Do if I Can’t Pay My Tax Bill?

Posted onCategoriesPersonal Finance

Tax season is stressful enough for all of us. Trying to track down your receipts and records, making sure you have all of your information correct, worrying that you’re missing some little thing that could blow up in your face later, all thoughts that might be rushing through your head as your prepare to file your taxes. As the deadline swiftly approaches though, there’s one fear that leaves many taxpayers feeling like they shouldn’t be bothering with it at all. What if you can’t afford to pay? Especially with recent changes in the tax law, particularly with adjustments that were made to withholding by many employers, more taxpayers than usual are finding themselves owing money this year. For some, they may think it’s tempting to just not file, believing that if they don’t face the problem, it will wait. Unfortunately, the exact opposite is true. Ignoring it won’t make it go away, but tackling the issue as quickly as possible will give you the best chance to navigate the situation as smoothly as possible.

Get Help

The first thing to do is get help. This can be a long and complicated process, and having someone in your corner is the single best factor in making sure you get through this in an orderly manner. The IRS does have a help line you can contact that will explain your options to you. It’s important to remember though that these agents are working for the IRS, and their goal is not to save you money, but to help you get your bill paid in full. Our tax professionals can review your records and ensure you’re taking advantage of all of the deductions that should apply for you, as well as following the correct filing procedure to save you money. Because you pay us, we work for you and our incentive is to help you legally save as much as you can. We also offer IRS representation if needed.

Pay what you can

If you can’t pay the full amount you do owe, you’ll want to pay as much as you can. Any unpaid amount will be subject to compounding interest as well as late fees, so reducing this amount as much as possible will save you money. Because of the high interest rates, you’ll want to make sure whatever plan you have for paying the remaining balance moves as quickly as possible.

Make arrangements with the IRS

You’ll need to make some kind of arrangement to pay off the remaining balance that you owe. The IRS has a few options available, or you can go through a private lender for assistance. The IRS offers installment agreements that can apply, with different fees depending on if you can make the full payment within 120 days after the due date, or if it will require longer. The interest rate the IRS charges on your past due amount is usually lower than you’d find by paying the balance with either a personal loan or credit card, but depending on your personal situation, the fees the IRS charge may cause the final amount to pay to be higher. You’ll need to consider all of these factors when deciding, and because the IRS fees are different for some taxpayers due to income and financial situation, the answer may be different for everyone. Finally, you might be able to qualify for an Offer in Compromise, or OIC, in which the IRS will accept a lower amount, though the rules for this are very narrow and may not apply in your situation.

Regardless of the amount or status your tax bill, you can face it with the confidence of help from expert professionals if you work with us at Baker Business and Tax Solutions. Contact us today to set up an appointment!