What should you do if you finish your taxes and you need to discover more taxes to the IRS that you can afford to pay?
It's bad enough not to get a tax refund that you have been waiting for.
Discovering that you have a lot of money is worse. The last thing you want is to get into trouble with the IRS
Fortunately, you can stay in the good graces of the IRS and to pay or settle the bill of tax, if you follow these steps .:
1. Make sure you really need the money
If you have a lot more tax than you expected, find out why .
Read your statement carefully filled and look for errors. It's easy to add the same income twice, or forget an important deduction.
If you expect to be eligible for a deduction or credit, and your tax return does not show it, make sure you have answered all the questions correctly.
Questions or check box can cause you to miss out on the tax benefits you may be entitled to miss.
Another way to determine if something is wrong is to compare the return this year in your tax return last year. If your tax situation has not changed drastically, but your tax bill, why.
If you need money because you received a letter from the IRS, do not automatically assume the IRS is correct.
They make mistakes, too. Call or write to the IRS for clarification.
If you still do not understand the problem and it is a significant amount of money, seek professional help.
2. Minimize penalties and interest
major tax bills are worse when you pay penalties and interest on top of the original amount owed. You can minimize penalties and interest in three ways:
Exceptions to underpayment of tax penalties
If you underpaid your taxes this year, but you had much less last year, you usually do not pay a penalty for underpayment of taxes you paid or had withheld as much as you were last year, and you pay the due date this year .
Enter the tax debt last year, while TaxAct can determine whether the safe harbor rule reduces your penalties and interest.
you may also be able to reduce your penalties and interest determined on a run rate if you received most of your income in the latter part of the year.
Ask reduced penalties
reduces or eliminates the IRS penalties and interest on the penalties if a taxpayer wrote a letter explaining the situation often.
For example, if you had an unusual tax event, you made an honest mistake, or you or your spouse had a serious illness, the IRS may waive penalties.
Make sure you ask for a "reduction" in your letter.
Pay as quickly as possible
If you owe taxes that may be subject to penalties and interest, don 't wait until 15 April (18 April 2016 for 2015 taxes) to file your return.
Send an estimated tax payment or file early and pay more tax than you can.
3. Request a payment plan
If you can not pay the tax when it is due, do not avoid the bill. It will only worsen. 9465 file Form, installment agreement request to set up installment payments with the IRS.
The IRS should allow you to make payments on your taxes late if you have $ 25,000 or less, you can show that you can not pay the amount you have now, you can pay the tax in three years or less.
you must also agree to comply with tax laws, and you or your spouse must not have had an installment agreement with the IRS in the past five years.
4. Offer in Compromise
You've probably heard ads for experts, promising to help you solve your IRS bill for less than you owe. It is true that the IRS will negotiate back taxes through an Offer in Compromise (OIC)
However, you have to offer at least as much as your net worth. - All you have reduced your debt. An OIC is like bankruptcy -. You should use it as an extreme last resort
What not to do
Do not put your tax bill on a high interest credit card
IRS imposes a much lower interest rate, which means you can spend more of your money to pay the balance not only follow with interest.
does not take money from your retirement accounts to pay a tax bill
you can be liable to a penalty, plus taxes income on the amount you withdraw. By the time you pay the penalty and income tax, you will not have much left to pay your previous tax bill than you thought.
Moreover, retirement accounts are retired!
Finally, if you owe the IRS a lot of money, do not panic!
If you play by the rules, stay in touch, and are scrupulously honest, the IRS can be a fairly reasonable creditor.
Some members of the IRS staff can even be very helpful. Do everything possible to solve and pay your bill, and they will not be your creditor for long.
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