What Do You Do When You Owe Taxes But Don’t Have the Funds?

For many people tax season brings the joy of a nice big refund to go out and splurge on something they’ve had your eye on for a long time. On the flip side of the equation are those people who surprisingly, or not, end up owing the IRS money. Not only do these people miss out on the extra cash influx, but they also have to come up with the funds to pay off the extra tax bill.
For some people, depending how high the bill is, they could have to pay even more than just the shortage amount. That’s because many times when people underpay they end up owing penalties for the underpayment. For those who owe a lot of money, those penalties could end up being huge. In fact, the penalties can even be much higher than the shortage.
That’s why it’s always best to try to avoid owing any money to the IRS, especially if you don’t have the funds to pay it off when the tax bill comes due. So what happens to people who can’t pay their tax bill? You do have a few options.
In some cases, it might be a good idea to take out a loan or a line of credit in order to pay off the bill. Of course, you will then be responsible to pay off the loan, so use caution. Another option is to apply for an extension with the IRS. This could buy you a little time to come up with the needed funds. If you need even more time then try applying for a hardship extension, which could give you up to six months to pay it off. You could also ask the IRS for permission to set up a payment plan to pay off the debt in installments.
Whichever path you decide to take, make sure you do something. Don’t ignore the problem or it will only get worse. The penalties will likely increase the longer you wait and the IRS could eventually take other measures or even press charges. So the bottom line is: do something.
How to Find Profitable Investment Properties
Want to know how to find profitable investment properties? Read on to see how to determine property values by one of our valuation analysts. The Discount for Lack of Control (DLOC) vs. The Minority Interest Discount (MID) The Business Valuation Glossary provides these definitions of two similar terms: Discount for Lack of Control – an…
Glossary of Business Valuation Terms
Glossary of Business Valuation Terms Valuation Services Valuation Process Valuation Experience Sample Report Glossary of Terms A Adjusted Book Value Method – a method within the asset approach whereby all assets and liabilities (including off-balance sheet, intangible, and contingent) are adjusted to their fair market values. Adjusted Net Asset Method – see Adjusted Book Value…
Business Valuations
Business Valuations The Business Valuations group at Greenstein Rogoff Olsen & Co provides the expertise of a large big four firm with the hands on individualized service of a small local firm with regional prices. We are committed to provide our clients and their advisors with the highest quality services and support available. Valuation Process…
Valuation Process
Valuation Process Valuation Services Valuation Process Valuation Experience Sample Report Glossary of Terms When performed on a going-concern basis, the valuation of a company is, in general, based on the projected earning of the company. In other words, how much could a hypothetical buyer of the company expect to receive as a return on his…