Thing to Do When You Can’t Pay Your Income Taxes Due:
Most people have the problem of not having enough money to pay their income tax dues around the due date. The problem is there are separate fines for late payment, filing late and much worse penalties for not paying income taxes. The penalty for not paying on time is 5% of balance due per month. For example let’s consider that you have filed for return but have not paid the due of $1000 then there would be late penalty of $10.
Considering Alternatives:
The next thing to do is to obtain money to pay your taxes through some loans or advances in workplace. You can also approach friends or relatives for money.
Using Credit Card:
The thing that could be considered is to use the credit card. This can be done by contacting your credit card provides. He would usually charge around 2.5%.if you owe $2000 then the charge would be around $50.
Negotiating an Installment Plan:
If you feel that you couldn’t pay your income taxes as a whole then you could negotiate for an installment plan with your IRS. This can be done by attaching an Installment Agreement plan with your income tax return. This would incur a fee of around $43.
What If You Can’t Pay Your Taxes In the Immediate Future?
If you can’t pay your taxes in the immediate future then IRS accepts it and provides a compromise plan called Offer in Compromise. This can be done as follows, complete form 656, offer in compromise and form433A, collection information statement and submit them to the IRS with $150 as fees.
IRS will consider your financial position and your future income potential to decide upon your offer. If IRS believes that it wouldn’t be able to collect full money as a whole then it would accept the offer. The common practice is that IRS allows you an installment period of 5 years to pay back your taxes.
Bottom Line:
The thing appears very confusing but the bottom-line is that if you can’t pay your taxes at least file your income tax return as there are ways to solve your tax paying problems.