Can’t Pay Your Taxes? What Should You Do?

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You filled out your taxes and suddenly realize you owe money and you can't pay. What do you do?

When it comes to income taxes, most people are rewarded for filing, because most get money back.

“Close to 80% of taxpayers get refunds on an average of over 2000 dollars a year.”
-Mike Dobzinski, IRS

But there are people who are afraid to file, because they owe and can’t pay. If that’s you, listen up. File anyway. Because if you file without paying, your penalty is half a percent a month. But if you don’t file at all, it’s 5% per month: 10 times more.

So if you owe a thousand dollars, file, but don’t pay, you’ll owe Uncle Sam $5 a month until you send in what you owe. But if you don’t file, the penalty is $50 a month.

So always file. And if you can’t pay, consider other options: the best, an interest free loan from boss, family or friends. Next would be a signature loan maybe from a credit union.

You can pay your taxes by credit card, but it will cost you: the fee is around 2 and 1/2 percent up front, plus whatever interest your bank charges.

And one last option: work out a deal with Uncle Sam. The IRS may be nicer than you think.

“The IRS recognizes that some people out there are having some financial hardships and if that is affecting their ability to pay their taxes they need to contact us.”
-Mike Dobzinski, IRS

Bottom line, if you owe and can’t pay Do file a tax return. Do talk to the IRS. Don’t not file anything and put your head in the sand.

Stacy Johnson

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Read Next: Tax Hacks 2017: Don’t Miss These 16 Often-Overlooked Tax Breaks

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