Six Tips for People Who Owe Taxes
1. Pay your tax bill.
If you get a bill from the IRS, you’ll save money by paying it as soon as you can. If you can’t pay it in full, you should pay as much as you can. That will reduce the interest and penalties charged for late payment. You should think about using a credit card or getting a loan to pay the amount you owe.
2. Get a short-term extension to pay
You may qualify for extra time to pay your taxes if you can pay in full in 120 days or less. You can apply online at IRS.gov. If you received a bill from the IRS you can also call the phone number listed on it. If you don’t have a bill, call 800-829-1040 for help. There is usually no set-up fee for a short-term extension.
3. Apply for a monthly payment plan.
If you owe $50,000 or less and need more time to pay, you can apply for an Online Payment Agreement on IRS.gov. A direct debit payment plan is your best option. This plan is the lower-cost, hassle-free way to pay. The set-up fee is less than other plans. There are no reminders, no missed payments and no checks to write and mail.
4. Consider an Offer in Compromise.
An Offer in Compromise lets you settle your tax debt for less than the full amount that you owe. An OIC may be an option if you can’t pay your tax in full. It may also apply if full payment will cause a financial hardship.
5. Change your withholding or estimated tax.
You may be able to avoid owing the IRS in the future by having more taxes withheld from your pay. Do this by filing a new Form W-4, Employee’s Withholding Allowance Certificate, with your employer.
Fulton Abraham Sanchez, CPA, founder of FAS CPA & Consultants of Miami, FL, is a Certified Public Accountant specializing in Tax Planning . You can email him to firstname.lastname@example.org or contact us on Facebook: FAS CPA & Consultants
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