๐ฆ๐ฐ What to do if You Canโt Pay Your Taxes?
With persistent inflation and the 2024 tax season fast approaching, taxpayers may struggle with paying their taxes. If you canโt pay on the deadline day, itโs important to still file your return. Failure to file is worse than failure to pay, with a penalty rate of 5% per month of unpaid taxes owed, whereas failure to pay is only 0.5% per month of what you owe. Once you have filed, the IRS can help you get that bill paid through various payment plans.
๐ธ Penalty Options for Not Paying Your Taxes on Time
There are two different penalty options that people can face if they donโt pay their taxes on time:
โ Failure to file penalty (5% per month of unpaid taxes owed)
โ Failure to pay penalty (0.5% per month of what you owe)
๐ฐ Remediating Penalties
If you canโt pay your taxes, you have some options, including:
โ Short-term payment agreement: This gives you roughly six months to pay off your bill.
โ Long-term payment agreement: This allows you to work directly with the IRS and gives you up to six years to pay off your bill.
In more extreme cases where thereโs doubt about the taxes owed or if youโre in a dire financial situation, the IRS may enter a special plan with you. However, this is rare.
If you want the IRS off your back as quickly as possible, you can pay your taxes with your credit card, take out a personal loan, and then deal with your lender to pay off what you owe.
๐ต How the IRS Helps Taxpayers with Financial Issues
Filing your return on time is essential, even if you canโt pay right away. The IRS offers several ways to help taxpayers get back on track with their tax payments, including:
โ Short-term payment extensions
โ Payment plans
โ Special payment arrangements in rare cases
โ Offering alternatives to help manage unpaid taxes
In any case, the IRS isnโt going to leave you alone, so itโs essential to reach out and communicate with them to avoid more severe consequences.
๐ค๐ป Wrapping Up
In summary, if you canโt pay your taxes on time, file your return and communicate with the IRS. Failing to file is worse than failing to pay, and the IRS offers various methods to help taxpayers manage their unpaid taxes. Donโt let tax season weigh you down. Take advantage of the options available to you and get back on track.
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