What If I Can’t Pay My Taxes?

Tax payments can be stressful at times and especially if you are lacking behind in your payments and can’t pay your taxes this can put you in a tough spot with your creditors and in severe conditions you can lose your assets too. If you’re facing financial troubles and are in a difficult position it’s time to take things seriously and adopt a proactive approach to deal with taxes in order to save yourself from the troubles.

Can’t Pay My Taxes

With the help of tips and suggestions below you can handle your taxes efficiently:

Contact the institution you owe

In case you can’t pay your taxes, it’s time to contact creditors and plead your case. With many smaller banks and financial companies you can directly call them to explain your situation. Many times they will give you an extension on your payment or offer other helpful options. Though there are no charges for the extension but once you get an extension you need to pay your dues by the deadline in order to save yourself from the penalty.

Inquire about an installment plan

IRS usually offers an installment plan in case your tax payments are high and you can’t pay your taxes in lump sum. What you need is to inquire about such installment plan which will break your lump sum payment in small payments so that you can pay them easily. You can fill out a Fresh Start Installment Agreement application by creating an online account via Online Payment Agreement. It’s an easy way and you will be notified as soon your application is approved.

Explore your Options

IRS provides you with an alternate option either to pay your taxes via debit or credit card. Paying through your debt card is more or less like paying through a check whereas paying your taxes through a credit card is more risky because there is interest rate involved in it. You don’t want an extra piled on amount on already existent taxes. It’s usually not recommended to pay your tax debt via credit card who is already suffering from a financial trouble or is at risk of it. Paying your tax debt through credit card should be your last resort in case of the severe penalties from your creditors or IRS.

Still can’t pay your taxes???

Even after following the above mentioned steps you still can’t pay your taxes then you should try these steps:

Trade-off

If you can’t pay your taxes after even trying everything you can make an agreement or a settlement of a dispute with IRS that is reached by each side making concessions. What you need to do is to compile your financial information and details in such a way that IRS is moved and is influenced by your plea. You need to provide them with substantial proofs that you are under a serious financial trouble and there is no way out.

Borrow… but be careful!

If you can’t pay your taxes you can lend money on low interest rates from a lending club. The other available option is to borrow money from peer-to-peer lender. But you need to be cautious in your dealings and agreements because the debt you are unable to pay will accumulate and will further way you down.

Be aware of the penalties

Don’t put off your tax payments and ignore deadlines. The penalties for late payment can be costly. Look at all your available options. Even if you are already in financial crisis there is no way out of the tax payments. It is advisable to address the problem head-on instead of digging it in the sand and letting it to pile on and grow in to a much worse problem that is out of control.

Be aware of your tax rights

Being a taxpayer you should know about your rights. There is no logic behind being subjected to dire some financial scenarios.  If there are alternative solutions available you should definitely take advantage of them such as installment plans. Explore your options well so that you can tackle the problem head-on.

Know about tax breaks

It is frustrating and stressful if you can’t pay your taxes. Therefore it is mandatory to take full use of any available alternate opportunity such as tax breaks. These tax breaks can help you out by easing the financial burden.

Don’t be embarrassed

Don’t be embarrassed if you can’t pay your taxes as you are not the only one out there facing the problem. IRS is there to help you out and offer you solutions. You can visit their website, the page titled ‘What Ifs’ For Struggling Tax Payers is filled with Q&A to help the taxpayers.

Remember:

  • Don’t put off your payments
  • Be proactive
  • Look for alternate solutions to pay off debt