Tax time is always one of the most stressful times of the year and people are always filing later and later each year. What happens when either you can't file on time or know that you cannot afford to pay taxes back before April 15th?
Here's a couple things that can help you decide how to go about it:
Don't Do Nothing
The IRS does not forgive forgetfulness or ignorance. Even if you cannot pay back taxes immediately, you must file. The penalty of not filing is much greater than what one usually owes. Not filing can result in 5% of what you owe, per month until you file, up to 25%. In a nutshell, that amounts to about 10 to 20 times more than what you owe.
Decide when you are going to be able to pay and how you can pay it.
If you think you can pay within 30 days, it's better to file, and the late payment penalty will be .5%. Again this is much less than 5%
If you think you can pay within 30-120 days, you can talk to the IRS and request for a short-term payment extension. There will still be a penalty for taking this route, but still less than 5%.
Anything more than that and you will have to set up installments with the IRS, and there are limitations on what you owe and how soon you can pay it back.
Another option to pay back is through a credit card. This is only ideal however if you have a credit card with a 0% APR and can pay it back within a year. Anything else and you will end up paying more interest on the card and you're better off requesting a payback plan.
In any of these cases, you need to speak to the IRS to actually request to go through these options. They will not solicit you with your options.
What if you cannot file by the 15th?
For any reason, you must file an extension using a 4868 form by the 15th. This gives you 6 months (October 15th is the latest) to file your taxes. To reiterate, this is to file your taxes, not extend to pay back taxes. Taxes are always due on April 15th.
Members of the Network Advantage Card have access to financial advisors to help guide you through the tax season.
Join today and find out how you can get those same benefits!
Getting Ready to File Your Taxes
Tax time is always one of the most stressful times of the year and people are always filing later and later each year. What happens when either you can't file on time or know that you cannot afford to pay taxes back before April 15th?
Here's a couple things that can help you decide how to go about it:
Don't Do Nothing
The IRS does not forgive forgetfulness or ignorance. Even if you cannot pay back taxes immediately, you must file. The penalty of not filing is much greater than what one usually owes. Not filing can result in 5% of what you owe, per month until you file, up to 25%. In a nutshell, that amounts to about 10 to 20 times more than what you owe.
Decide when you are going to be able to pay and how you can pay it.
If you think you can pay within 30 days, it's better to file, and the late payment penalty will be .5%. Again this is much less than 5%
If you think you can pay within 30-120 days, you can talk to the IRS and request for a short-term payment extension. There will still be a penalty for taking this route, but still less than 5%.
Anything more than that and you will have to set up installments with the IRS, and there are limitations on what you owe and how soon you can pay it back.
Another option to pay back is through a credit card. This is only ideal however if you have a credit card with a 0% APR and can pay it back within a year. Anything else and you will end up paying more interest on the card and you're better off requesting a payback plan.
In any of these cases, you need to speak to the IRS to actually request to go through these options. They will not solicit you with your options.
What if you cannot file by the 15th?
For any reason, you must file an extension using a 4868 form by the 15th. This gives you 6 months (October 15th is the latest) to file your taxes. To reiterate, this is to file your taxes, not extend to pay back taxes. Taxes are always due on April 15th.
Members of the Network Advantage Card have access to financial advisors to help guide you through the tax season.
Join today and find out how you can get those same benefits!
Share Your Comments & Feedback: