What to Do if You Can’t Pay Your Tax Bill
Hudson, NH Resident Has Concerns
If you cannot pay your tax bill when it is due, the outstanding amount owed will begin to accrue interest and penalties. If time goes on without any payment to the IRS, they may put liens on your property or garnish your wages. In extreme cases of tax evasion, violators may be subjected to jail time.
A Hudson resident had hit a rough patch and had not been making his estimated tax payments each quarter as a self-employed individual. With the end of the year looming, he was concerned about how he would pay his tax bill.
File Your Tax Return on Time or Apply for an Extension
If you are not able to pay the outstanding balance on your taxes at the time of filing, you should still file your return on time to avoid additional problems. It may be helpful to file for an extension to allow yourself more time to gather the money needed to pay your tax bill. Not filing your tax return by the deadline or not filing at all can result in additional penalties being added to your outstanding tax bill.
In some cases, you may be able to work with the IRS to set up a payment schedule to pay back the outstanding amount in taxes. While there may still be interest and penalties incurred, this will let the IRS know that you are willing to work with them to pay the outstanding debt.
Quarterly Estimated Tax Payments Can Prevent Surprises
By planning your taxes throughout the year, you should not be surprised with a hefty tax bill when it comes time to file. Those that are self-employed, have received a large windfall, or have sold stock for a profit should have been paying quarterly estimated taxes throughout the year. You are responsible for paying quarterly taxes on the money that is received that has not had any taxes withheld.
In the case of the Hudson resident, Merrimack Tax Associates was able to assist in communication with the IRS and the plan is to set up a payment schedule for this outstanding tax amount.