They say two things are certain, taxes and death. But what happens when you have a little trouble paying your taxes when they’re due? The best option is to get help from a tax attorney in your state if you find that you’re short on cash when tax day comes around.
Everyone knows that the IRS is serious about their business, and that paying your taxes is not optional. So if you find that you are unable to pay your taxes on time, it helps to understand the penalties that the IRS can exact. The two penalties are a late filing penalty and a late payment penalty. Both penalties increase each month beyond the due date. It should be noted that there are limits to how high the penalty can climb. And it is possible to incur both the late filing and the late payment penalties. There is also a penalty cap in this instance.
When it comes to paying your taxes, you do have options. The IRS will work with most taxpayers to create payment schedules and/or mitigate penalties and fees. It is possible to pay by major credit card, but you will have to use one of the three IRS approved payment service providers. You may be eligible for an offer in compromise. An offer in compromise allows you to settle your tax debt for less than what you actually owe. This may or may not come with the option of making payments. Another option is a delay in collection. This allows you to delay your repayment until your financial situation improves. A delay does not make the debt disappear, it just means that the IRS has determined that you cannot currently pay any of your tax debt. Your debt is also likely to increase as interest and fees will be applied.
There’s no way to get around paying your taxes. But it can be to your advantage to contact an attorney who knows the ins and outs of tax code. Consulting with or securing legal counsel can save you a lot of headache, hassle and money. Dealing directly with the IRS can be very intimidating and there may be loopholes or specific questions to ask that can positively affect the outcome of your situation.
Filing for an extension is a good way to buy yourself a little more time and lessen the severity of any penalties. If you choose to file for an extension, be sure to do it before April 15 so that you can have an extra 6 months to prepare your tax return. This will allow you more time to get your financial situation in order so that you can pay or set up a payment plan that works for your situation.
Since there’s no getting around paying taxes, it is best to try to get ahead of the ball so that you have more time to save some money. Failing to file or failing to pay are two categories you don’t want to fall into, so seek help when you need it for better outcomes.