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.
Advice for Startups Seeking Venture Capital
Advice for Startups Seeking Venture Capital The financial crisis makes it harder to get funding, but those that prove themselves during this period will be better positioned to thrive. By John Tozzi From BusinessWeek.com Landing venture capital is tough for startups, even in a good economy. But given the ongoing financial crisis, how hard is…
Due Diligence for Startups Raising Venture Capital
Due Diligence for Startups Raising Venture Capital By C. Worrall You have presented your plan to the venture capital partners. It was well received and they have to offer you a term-sheet. You have negotiated your major deal points and are ready for the investment. Now the VC wants to commence with due diligence. Wait…
5 Do’s and Don’ts When Approaching A Possible Joint Venture Partner
5 Do’s and Don’ts When Approaching A Possible Joint Venture Partner By Darren Yates It can be an intimidating task when approaching a potential online joint venture partner for the first time. Listed below are five dos and don’ts that will make the difference between achieving a partnership and getting it set off on the…
Private Equity and Venture Capital Financing Structures
Private Equity and Venture Capital Financing Structures By Joseph B. LaRocco There are several structures that Private Equity funds (also known as venture capital funds) use when they give the green light to fund a company. The basic structures for private companies are common stock and convertible preferred stock. These structures usually contain an anti-dilution…