Tax filing is a duty that every citizen should abide by, and failure to do so is known to attract heavy fines and penalties. While filing your tax returns is something that is mandatory, there are times when you are to pay taxes, and you do not have sufficient funds for it. Would you not file for the taxes then?
Even though you do not have the money to pay for your taxes, you should never refrain from filing returns. The worst case would be paying a certain amount of money as a fine, but that would keep you safe from trouble and label you as a good citizen. Non-payment of taxes, as well as the inability to file tax returns, can often have a bad impression on the credit score while making it difficult for you to acquire loans and insurance policies in the days to come. While there are things that can save you from trouble, here are a few put down for you to know of.
1. Ensure that you have filed your returns on time
It is necessary that you file your returns on time even when you do not have money to pay for your dues. This shows your dedication and commitment towards the IRS. They are known to assess people on the basis of two reasons where they see whether you are paying your tax on time and also filing for the returns on time. If you fail to perform any of them, there are penalties levied accordingly. The penalty for not filing your returns is 5%, and the nonpayment of the taxes is 0.5% of the unpaid tax amount. So now you could decide which is right for you. Not everyone would be alright with the percentage of the penalty levied on them when they fail to pay their taxes, and so things get to worsen while the amount getting accumulated with each passing day.
2. Look out for payment options
There are times when people suffer from financial problems and cannot pay their taxes on time. While that happens, you should ensure that you pay them at the soonest. It could be looking out for a way out through your equities, your credit cards, a personal loan, borrowing it from relatives or acquaintances or probably looking out for extra work for more payment. Whatever it may be, ensure that you do not have to delay the tax payment procedure for too long. There are times when credit card interests are lower than the tax payment ones, and that is when you should make the tax a priority. While these options are easy to follow as you can get away with the trouble all at once, it needs a lot of planning and taking any random and drastic step can affect your finances badly as you will have to repay the money sooner or later.
3. Opt to pay taxes in instalments
The government is known to make things easy to a large extent for people where they are known to accept tax payments in instalments socially when people cannot afford to pay all the money at once. This is something you can take advantage of when you need to fill the form 9465, and you are set to bring peace where you do not have to watch all your money go away at once for your taxes. Depending on the time you would take to pay back the money, you could accordingly convey it and then pay as and when feasible. Taking this opportunity and ensuring that you pay the money on time, you get to manage your finances well instead of watching a lot of money go away at once. This way, you pay your taxes with ease as well as stay away from penalties.
4. Make use of ‘Offer in Compromise‘when there are no options
There are times when you cannot pay your tax money in instalments and also not make arrangements for immediate payments. This is when you are to use your wildcard called the ‘Offer in Compromise. Here, you are allowed to pay a lump sum amount of money as and when you can over a period where you would have to submit a personal financial statement along with an application fee of $150. With that, there is the need to file Form 656 so that there is no extra penalty levied on you and that you assure the fact that you are financially capable of paying back the money.
5. Let an expert help you out
There are times when you do not know how to save yourself from the tax payment especially when you have a financial crisis. With an expert helping you out, you are likely to know what is right and wrong for you. Conveying them your financial condition truthfully and letting them know of all the feasible methods from your end would help them analyse what can be done and how you can pay up your tax money on time. There are times when self-analysis doesn’t help especially when you have limited knowledge of tax payments and often panic when such situations arise.
6. Sit and analyse
When it comes to taking financial decisions for tax payments, it is essential for you to sit with your family members and make a plan. Conveying them about the drastic step that you intend to would ensure that you care about them and that their input matter to you. They may be times when your family has a backup plan where you may not have to take major financial steps that could create a crisis in the days to come. When you make plans with a calm mind, things can become easy while making you come to a good conclusion with no stress in the days to come.
While you follow these tips, you can rest assured that you have made the right choice and that you do not have to stress about making arrangements while taking a risk and then making tax payments.