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.
Will Your Tax Refund Be Delayed?
It’s only January, but because the calendar has turned to 2015, that means the tax season is officially here. While most people don’t file their taxes in January, there are a few early birds who go after the first worms of the year, so-to-speak. Although it’s often a good idea to make sure the IRS,…
Are You Looking To Invest for Growth?
What kind of investor are you? There are many types of investment strategies and each person will follow the strategy that best fits his or her plan. At GROCO, we can help all kinds of investors, including those who are investing for growth. When it comes to long-term growth, the total return on your investment…
Not Living on the Earth? You Still Have to Pay Your Taxes on Time
You gotta hand it to the IRS for being thorough. They’ll leave no stone unturned in an effort to make sure that every taxpayer files their return. That’s even true of very big stones, otherwise known as asteroids. In other words, even if an astronaut wanted to hide behind an asteroid or a moon rock,…
With Gas Prices Down, Could Gas Taxes Be Going Up?
Rich or poor, young or old, no one likes high gas prices – with the possible exception of oil and gas companies. In any case, the recent drop in gas prices around the country has no doubt brought some relief to just about everyone in America, including big corporations that own large fleets of vehicles.…