Staying ahead of your taxes is the one and only way to avoid trouble with the IRS. Filing your returns on time and paying the taxes due before the deadline can save you from any kind of penalties and problems. However, things may not be as easy if you have an unexpected tax bill that you aren’t prepared for. You can probably get out of the fix by using up your savings or borrowing money but this may not always be possible. Still, you shouldn’t panic in such a situation as there are some measures that can help you handle the problem.
- Pay as much tax as you can
Filing your return on time is the first thing you need to do, whether you are capable of clearing your tax bill or not. You can actually lower penalties by paying as much as possible; even a fraction will make a difference. Consider using a credit card that has a lower annual percentage rate in comparison to the penalty and interest rate applied by the IRS to your outstanding balance.
- Seek a payment extension
Those going through difficult financial circumstances can seek a payment extension from the IRS. They might grant you a 6-month grace period as an extension if you are able to convince them about a substantial financial loss. For example, you may demonstrate that you will have to sell your property at a low price to clear the tax bill by the last date.
- Request for setting up a payment plan
In a tough event when you will not be able to clear your bill in one shot, requesting the IRS for setting up a payment plan makes sense. You will have to pay small fees and have a professional attorney handle the proceedings on your behalf. Though it may take some work, a payment plan can help you sideline the penalties related to missed deadlines
- Look for a fresh start program
A payment plan may not be an option for you if there is a major bill comprising the previous year’s dues. You can explore the fresh start program as an alternative in such cases. This is a special program by the IRS, specifically designed for taxpayers with large debts that they cannot pay back easily. Negotiations are best done by professionals and you can collaborate with Silver Tax Group as they specialize in handling such cases. If you are genuinely interested in clearing them off and qualify for the initiative, this can be a great option.
- Consider your repayment alternatives
Besides finding out about payment plans and fresh start initiative, you should also consider your repayment alternatives. After all, clearing off your tax bill is a responsibility you must fulfil. Consider options like taking a home equity loan, borrowing from friends, getting a low-interest 401(k) loan or utilizing your employer’s benefits.
Handling an unexpected tax bill can be a major concern and you can resolve it only with the right approach. Ignoring the problem or trying to evade taxes is the last thing you should try doing because it will only make your problems bigger and more complicated.