Everyone who has a job is obligated to pay taxes. Now, there are exemptions, but the vast majority of people are required to pay them. Taxes improve a lot of things such as infrastructure, healthcare, and new technology, just to name a few.
As a citizen of your country, it is your duty to pay the correct taxes depending on your current salary. Now, what happens if you can’t pay your taxes on time?
Well, you are required to pay a fine, you will be harassed to pay, or in extreme situations, the government will just get what you owe them and they are going to get it directly from your bank account.
Now, you do not want that to happen to you, right? So, in the event that you cannot pay it in time, what are you going to do? Here are some tips:
1. File on Time and Pay as Much as You Can
As a taxpayer, you are required to file in your internal revenue office. You are then required to pay depending on your current salary.
Be sure to file on or before April (or whenever it is due depending on your country). When you file late, you will be slapped a fine in which you have to pay it accordingly.
2. Re-Finance Your Home
When you have a good mortgage in your home, you might want to consider refinancing it. The idea of refinancing is to get another loan with ideal interest rates that you can take without huge repercussions.
Refinancing a home loan or mortgage is great because you can get a sizable amount of money. Do this if you have a pretty huge tax bill that you were unable to pay before.
3. Apply for a Monthly Payment Plan
If you have unpaid taxes and you failed to pay the internal revenue annually, perhaps changing your payment method to monthly will do the trick.
You can apply for installment plans and the IRS are usually lenient towards people who failed to pay taxes on time.
Paying monthly installments can also help you to budget your money more effectively.
4. Use Your Credit Card or Alternative Funding
Did you know that you can use your credit card to pay your taxes? It is possible since it is a widely accepted mode of payment. However, be sure to only use this measure if you’ve applied for an account that has reasonable interest rates.
You are not only limited to using your credit card as a mode of payment. However, some people use a personal loan online since it is a pretty convenient and easy way to get cash.
For those of you who do not know, it is a short-term loan that a lot of people like because of the fact that you can get the money in the fastest time possible.
Other ways of paying your dues would be taking out a loan, HELOC, among other things.
5. Consider an Offer in Compromise
People who neglect or unable to pay taxes usually have legitimate reasons as to why they failed to comply with their obligation.
Things like emergencies, sudden deaths, bankruptcy are just some reasons which the Internal Revenue can understand deeply.
In such cases that you are unable to pay your taxes at this time due to an event, you can apply for a compromise agreement.
After application, the Internal Revenue will see to it if you’re qualified or not. After it is done and you’ve qualified for it, your tax will be reduced considerably. The reduction will depend on your capacity to pay, your current income (if any), if you have any liquid assets, and so on.
6. Utilize the Online Payment Agreement Tool
Don’t want the hassle of going to the IRS yourself if you want to ask for a monthly installment plan? Do not worry, you can use their online payment agreement tool.
There is a form 9465 you can fill up so that you will have the chance to qualify for a monthly installment plan. It saves you the hassle of physically going to their office to request for the plan.
7. Don’t Ignore a Tax Bill
Even if you do not have the means as of the moment to pay your tax bill, never (and I cannot stress this enough), ever ignore a tax bill.
You will suffer major repercussions if you do so. I tell you, it will haunt you for the rest of your life as the IRS is keen on people who do not pay their taxes religiously.
Paying your tax bill is very important. Make sure to file on or before the due date so that you will not incur penalties. Use your credit card or other alternative means of financing or even request for a compromise agreement or a monthly installment plan to help you get by. Whatever your case may be, never neglect a tax bill.