4 tips if you need help paying your taxes
With the current economic environment, you may owe on this year’s tax return more tax than you can afford to pay. Don’t panic, here are 4 tips to get your tax bill paid and minimize interest and penalties.
1/ Make a partial payment
Individual income taxes are due each year on April 15th. As a reminder, if you file an extension, it only grants you additional time to FILE your return, you must still PAY your tax in full by the tax due date. If you can’t pay the tax in full on 4/15, consider making a partial payment. Doing so will prevent interest & penalties from accumulating. Interest and penalties build up quickly and overtime can exceed the original tax due.
To make a tax payment electronically: https://www.kbfinancials.biz/managing-your-irs-account-online.html
2/ Ask for a payment plan
You can request for a plan to pay your tax due within 180 days (Short-term payment plan) or request a long-term payment plan to pay your tax due within 6 years (Installment agreement).
To apply for a payment plan – https://www.irs.gov/payments/online-payment-agreement-application
3/ Negotiate a lower balance with the IRS
If after considering all payment options, you still cannot pay the tax or that doing so will create a financial hardship, you may make an offer to pay less than the amount due (Offer in Compromise). The revised tax due will be based on what the IRS considers your true ability to pay. Once that amount is paid, the rest of your tax debt is forgiven.
To apply for an Offer in Compromise – https://www.irs.gov/payments/offer-in-compromise
4/ Obtain a delay in the collection of your debt
If after reviewing your financial situation, the IRS determines that your expenses outweigh your income and that you don’t have assets that can pay your debt in full, the IRS may delay collecting the amount you owe (Currently Not Collectible status).
To apply for a CNC status – https://www.irs.gov/businesses/small-businesses-self-employed/temporarily-delay-the-collection-process
If you have unfiled returns or tax debts, contact Karine Bauer EA to assist you in getting back in compliance. As always, the views contained in this article are not tax or legal advice and are not a substitute for consulting with a tax professional. Karine Bauer, EA is an IRS Enrolled Agent licensed by the US Treasury Department with unlimited rights to represent taxpayers before the Internal Revenue Service. Karine is also a Quickbooks Pro-Advisor and a member of the Association of Chartered and Certified Accountants (ACCA). She is an experienced tax professional with more than 20 years of international experience.
Bear in mind the date of this article as tax law evolves over time.
Updated April 9th, 2022