Have you received a notice of tax due from the IRS? With income tax filing season in the rearview mirror, many Americans will now have to deal with owing money for last year's taxes.
If you're in this situation, here are four steps to take when you get an assessment of taxes due.
Get a Second Opinion. Just because you filed your taxes doesn't mean you can't change them if you have new information. If you did your taxes yourself or if you have any concerns about the tax preparer you used, seek out a second opinion from a qualified tax preparation service. You may find that deductions were missed, credits weren't taken correctly, or you would benefit from changing filing or dependency status.
File for a Hardship Extension. The IRS is actually somewhat accommodating towards taxpayers who owe. If you would have to enter into a particular — and substantial — hardship in order to pay the tax due, the IRS may authorize a 6-month extension of time to pay. A significant hardship would include such things as having to sell property at a loss or being unable to meet the minimum costs of living.
Request an Installment Agreement. If you don't qualify for a hardship extension, fill out an application for an installment agreement. There is some cost to starting the payment plan (between $31 and $225 depending on the payment arrangements), but it can buy you several years to pay the amount due. You can usually request a payment plan online, but you may want to have your tax preparer assist if this is your first time.
Find an Interest-Free Source. Both a hardship extension and an installment agreement will continue to charge interest on the balance due. So, once you've bought time with one of these methods, search for a better deal to pay off the debt. Many taxpayers receive 0% offers on credit cards from time to time. This would be a good way to pay off your tax bill faster. In addition, you may want to consider the fees and rates of tapping home equity or plan to use a future bonus from your employer to clear the debt.
Once you've dealt with your 2018 tax bill, try to avoid the problem in 2019 by working with an experienced tax preparation company before the year ends. They can help you determine ways to avoid a future balance due — such as adjusting withholding amounts, paying quarterly taxes, or shifting to nontaxable income sources. Whatever strategy you choose, you can rest easier knowing that you remain in good standing with the IRS both for this year and for the future.
Check out sites like http://www.tri-check.biz for more information about tax preparation services.Share