What Should You Do if You Can’t Pay Your Tax Bill on Time?

What Should You Do if You Can’t Pay Your Tax Bill on Time?

The 2019 tax season is in full swing and it’s already come with several changes and surprises. One of the biggest surprises is the number of taxpayers that are either getting a much smaller refund, or not getting a refund period. However, according to recent reports from Treasury Secretary Steven Mnuchin, refunds have been up recently. In fact, Mnuchin said that refund amounts had increased 17 percent in the last week of February, compared to the previous week. Essentially, that means payments are at “the same level as last year,” according to Mnuchin.

Surprise Tax Bill

That doesn’t do anything to help taxpayers that have already received their refunds with much smaller amounts. And for some taxpayers, the news is much worse. Some taxpayers have been shocked to learn that not only were they not getting a big refund, but also that they actually owe taxes. In other cases, people who expected a tax bill were surprised to find their bill was even higher than anticipated. There is still a month before the April tax deadline, so the numbers could change for better or for worse. But to this point, the tax season has left many taxpayers unhappy. But whether you’re happy or not, if you have a tax bill you need to pay it.

Be Proactive

So what should you do if you’re one of the unlucky people who ended up with an unexpected tax bill, or a higher bill than you anticipated? The deadline is fast approaching and you have to pay. But what if you don’t have the money to pay off your tax bill by April 15? Is there anything you can do? Start by being proactive. Don’t wait till the last minutes to figure it out. Come up with a plan and then act on it. Start by filing your taxes on time and paying whatever you can afford. That way, you won’t have to worry about a late-filing penalty on top of your tax bill. You’ll still have to pay a late payment penalty, but it’s much lower than the late-filing penalty.

Create a Payment Plan and Stick to it

The next thing to do is set up a payment plan with the IRS. In most cases, the IRS will accept any payment plan that’s reasonable. You might have to pay a fee to set up your plan, depending on how long it lasts and the terms of the agreement. You’ll also be responsible for the late payment penalty, but the interest rate will be much lower. According to the IRS the rate drops from 0.5 percent to 0.25 percent per month for as long as the installment plan is in place. Once your plan is in place, make sure you stick to it. Always make payments on time and in full.

Learn From Your Experience

Lastly, makes sure you learn from this experience and take the necessary measures to prevent the same situation from happening next year.

We hope you found this article about “What Should You Do if You Can’t Pay Your Tax Bill on Time?” helpful.  If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page  or our website at www.GROCO.com.  Unfortunately, we no longer give advice to other tax professionals gratis.

To receive our free newsletter, contact us here.

Subscribe to our YouTube Channel for more updates.

Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com.  GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.

Alan L. Olsen, CPA, Wikipedia Bio

GROCO.com is a proud sponsor of The American Dreams Show.

The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.

Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.

The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.

They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..

MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness.  It’s mission statement:

In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.

Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.