Entrepreneurs, independent contractors, and other taxpayers may become accustomed to having a balance due when they file their tax returns. Even if you can’t pay your full balance right away, you should still submit your tax return on time to avoid the failure-to-file penalty and other consequences of unfiled tax returns.
Pay by Tax Day
You won’t face late payment penalties if you pay your balance by Tax Day, which is typically around April 15th. If you file your tax return early, you may get a few months to decide how you’ll come up with the money.
If you can borrow the money or sell something to get the cash, you can avoid being charged any tax penalties or interest on your balance.
You also have the option of putting your tax bill on your credit card. However, you will be charged a payment processing fee.
Short-Term Payment Plan
Short-term payment plans last 120 days or less. You will have to pay penalties and interest until your balance is paid off, but there are no fees to set up these plans.
If the only loans you can get have high interest rates, a short-term payment plan may be your preferred option.
Installment Agreements
Installment agreements may be your best option in any of the following situations:
- You owe a lot of money to the IRS, anywhere from $10,000 to $100,000 or more.
- You’re in a tight financial situation and can’t afford to pay a large lump sum towards your tax debt right now.
- You have some equity in assets or disposal income, so you may not qualify for an Offer in Compromise.
The good news is there are many types of IRS installment agreements with flexible terms. The IRS has some standard plan terms regarding monthly payment amounts and the length of your repayment period, but you can get a customized plan if you need more time or a lower monthly payment.
A tax resolution attorney can help you negotiate an IRS installment agreement that won’t break your budget. You may also be eligible for other tax resolution strategies, such as penalty abatement or innocent spouse relief, so request a consultation to discuss your case.
The Gartzman Law Firm can find the best tax resolution option for your situation. Use our contact form to request a consultation with an Atlanta tax resolution attorney.