For some people do not have a big tax refund on income is a terrible disappointment. The only thing worse is having to pay even a small amount to Uncle Sam at the end of the year.
When you are finished your taxes and find out that you need a small amount of the tax, however, you must consider that you got something done.
You avoided to let the government keep your money all year, without interest. Instead, you were able to use your own money all along.
If you have a large amount of the tax, however, this is another story. You may not be able to simply write a check to the IRS and pass
Here are your options when you have more tax you can pay immediately :.
First, try to minimize the damage
Make sure you really need the money. Read your return carefully. If you expected to receive a deduction or tax credit and not, for example, make sure you enter all necessary information in TaxAct.
If you really need the extra taxes, and your total tax bill includes interest and penalties, seek reduced sentences.
If you must have made estimated payments, a large portion of your bill can be penalties for underpayment of estimated tax.
The IRS often reduced penalties for various reasons.
Write the IRS a letter explaining why you think the penalty should be removed, or "diminished". you have to ask specifically for the reduction of the sentence in your letter.
Request a payment plan
The IRS may allow you to pay your tax with future payments. You can not do this every year, but it works when a proposed high tax law takes you by surprise.
The IRS should allow you to make installment payments if the total amount of the tax, not including penalties and interest, is $ 25,000 or less.
you have to show the IRS that you can not pay the whole amount when it is due and pay the tax within three years under the installment agreement, and you agree to comply with tax laws while your contract is in force.
Furthermore, you (and your spouse if you are filing jointly) must not have not failed to file or pay your taxes or had another installment agreement with the IRS in the last five years.
The IRS may allow you to have an installment agreement for tax bill over $ 25,000 if you can show that you can make the payments.
you will usually pay a fee of $ 43 to set up the plan, plus interest and penalties.
Borrow money elsewhere
If you can not (or will not) make payments to the IRS, also consider borrowing to pay your taxes.
It is generally not a good idea to tax you can not afford to pay on your credit cards. The IRS charges relatively low interest rates, so you may be better to make payments directly to them.
The exception may be when you have a credit card with a 0% or very low, or when you expect to pay the credit card bill off very, very quickly.
You could turn to other money sources if necessary, such as borrowing from parents or a mortgage. Or consider working overtime or selling something to get rid of this project as soon as possible tax legislation.
Tax reduction via "Offer in Compromise"
As a last resort, consider making an offer to negotiate with the IRS, called an Offer in Compromise (OIC).
Like many other creditors, the IRS is open to negotiation of your bill. Year.
However, only use this strategy as an extreme last resort. It's almost like bankruptcy.
You must provide at least as much as your net worth, the value of everything you own, unless your other debts.
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