The end of tax filing extensions is quickly approaching. What do you do if you can't pay the amounts you owe? You should still file your return by the due date and pay as much as you can. There are, however, additional steps that might help.
Credit Cards
You can charge your taxes on your American Express, MasterCard, Visa or Discover cards. If you go in this direction, you can use either of the following two sources:
Official Payments Corporation
1-800-2PAY-TAX (1-800-272-9829)
www.officialpayments.com
Link2Gov Corporation
1-888-PAY-1040 (1-888-729-1040)
www.pay1040.com
If a credit card is out of the question, you may be able to pay any remaining balance over time in monthly installments through an installment agreement. If you are completely wiped out and the future looks grim, you may also want to consider getting the tax amount reduced through the Offer in Compromise program.
To apply for an installment payment plan, fill out and attach Form 9465 to the front of your tax return. The IRS has streamlined the approval process if your total taxes (not counting interest, penalties or other additions) do not exceed $25,000 and can be paid off in five years or less. Be sure to show the amount of your proposed monthly payment and the date you wish to make your payment each month. Make absolutely sure you can make the payments.
The IRS charges a $43 fee for setting up an installment agreement. You will also be charged interest plus a late payment penalty on the unpaid taxes. The late payment penalty is usually one-half of one percent per month or part of a month of your unpaid tax. The penalty rate is reduced to one-quarter of one percent for any month an Installment Agreement is in effect if you filed your return by the due date (including extensions). The maximum failure to pay penalty is 25 percent of the tax paid late.
If you do not file your return by the due date (including extensions), you may have to pay a penalty for filing late. The penalty for failing to file and pay timely is usually five percent of the unpaid tax for each month or part of a month that your return is late. The maximum penalty for failure to file and pay on time is 25 percent of your unpaid tax.
In Closing
The IRS wants you in the system, even if you're broke. Whatever you do, file your tax return in a timely manner. Once filed, the IRS will work with you on payment issues. Don't get stressed. Keep in mind that millions of Americans have the same problem.
Richard Chapo is CEO of Business Tax Recovery - Obtaining tax refunds for small businesses for overpaid taxes. Discovery tax strategies and deductions in our tax articles section.
You're at your office, or home, and the doorbell rings... Read More
If your like many, you don't always understand what people... Read More
Should I take wages or dividends from my privately owned... Read More
Excerpted from the new book, "How to Do Space Age... Read More
In elementary school, kids come up with creative excuses why... Read More
As everyone in the U.S. knows, we have just passed... Read More
It's that time again, the April 15 tax deadline is... Read More
Misconceptions, misinterpretations and just plain "untruths" are floating about income... Read More
If your business has employees, you must pay employment taxes.... Read More
Let's assume that you would like to begin saving for... Read More
"Settle for Pennies on the Dollar! IRS debts settled for... Read More
The means and types of businesses have transformed with advent... Read More
Emerging Legal issues of Tax compliance of e-business Self-assessment system... Read More
In the latest Star Wars episode, the evil empire executes... Read More
While there are many equally valid reasons to incorporate, saving... Read More
If you have employees, you are responsible for paying a... Read More
As an employer, you must pay employment taxes if you... Read More
Reservists called to active duty and enlistees in the armed... Read More
Recently, I stumbled across a concept that could change your... Read More
Media reporting of a new EU savings tax directive has... Read More
Hit a big one? With more and more gambling establishments,... Read More
If your identity is stolen, your finances can quickly become... Read More
Often people fall on hard times and stop paying on... Read More
The Internal Revenue Service is reporting that the difference between... Read More
Practically every small business has receivables that it cannot obtain... Read More
Does this scene sound familiar? It's April 7. You haven't... Read More
Self-assessment relies on taxpayers voluntarily meeting their tax obligations. This... Read More
It may not be high on the list of wedding... Read More
As a sole proprietor, it's wise to familiarize yourself with... Read More
Have you been thinking about incorporating your small business or... Read More
Anyone who is closely related to an accountant knows that... Read More
Deducting Your Auto ExpensesAuto deductions are a very complex topic.... Read More
A Federal Tax Lien (FTL) is a legal instrument that... Read More
The United States is a nation of entrepreneurs. There are... Read More
Do you realize that some tax forms ask you to... Read More
Does this scene sound familiar? It's April 7. You haven't... Read More
April 15th looms in front of most people every year... Read More
In the largest criminal tax case ever filed, KMPG has... Read More
The knock on the door from a Tax Inspector is... Read More
One way to maximize your business profits is by reducing... Read More
If you have employees, you are responsible for paying a... Read More
Haven't done your taxes yet? No problem. Now there is... Read More
Often people fall on hard times and stop paying on... Read More
Anyone who is closely related to an accountant knows that... Read More
OverviewIn the Pre-Budget Report of December 2003 the Chancellor Gordon... Read More
In a past article I relayed the plight of the... Read More
While accountants are reaching for aspirin, millions of Americans are... Read More
As your business grows, you are going to need help.... Read More
Running a home based business reaps many wonderful tax deductions... Read More
The IRS has obtained civil injunctions against more than 100... Read More
1812The first attempt to impose an income tax on America... Read More
With gas prices at an all time high before Hurricane... Read More
Deducting Your Auto ExpensesAuto deductions are a very complex topic.... Read More
We need real tax reform and we need it now.... Read More
It's that time again, the April 15 tax deadline is... Read More
One can never underestimate the enthusiasm that politicians have for... Read More
As teachers and students head back to school following a... Read More
If you are environmentally conscious and purchase a 2005 Ford... Read More
Assume a buyer in Pakistan downloads software from the Internet... Read More
The U.S. Department of Agriculture estimates that it costs nearly... Read More
"Settle for Pennies on the Dollar! IRS debts settled for... Read More
No one likes paying tax. Everyone understands that tax is... Read More
Many taxpayers are confused about how long they should keep... Read More
"What we've got here is a failure to communicate." ... Read More
Small Businesses Filing Amended Federal Tax Returns to... Read More
Six Urban Myths ? Taxation"I am proud to be paying... Read More
Tax |