You Owe Taxes, Now What
Alright folks, gather round for a good laugh because we’re going to talk about everyone’s favorite topic – taxes! Specifically, you owe taxes, now what? What do you do when you owe the IRS money and you’re not sure what to do.
Don’t worry, I’ve got your back.
First things first,
let’s establish when you actually owe the IRS money and when you’re past due.
Spoiler alert: it’s usually when you have income. Yeah, that’s right, the government wants a piece of your hard-earned cash.
So, when the tax year ends, technically you now owe tax for your previous year’s income. That amount is due on the filing deadline, which is April 15th most years.
Now, I know what you’re thinking – “But Incite, what if I don’t have the money to pay my taxes by April 18th?”
Well, my friend, you’re in luck! You can always just not pay them and accumulate interest and penalties.
That’s always a great idea, right? No, no it’s not.
But let’s say you’re like me
and you know you owe them money when the year ends and you can do your taxes, but you’re late and now have a debt to them.
Come April 15th, if you don’t have them paid by then, you’re officially late. And trust me, you don’t want the IRS knocking on your door.
So, what should you do?
Well, if you’re able to pay that tax off before the end of the year, we recommend paying as much of it off as you can as fast as you can and get it done.
And by “we,” I mean anyone who doesn’t want to end up on the IRS’s naughty list.
I wouldn’t do anything fancy with resolving the tax debt other than paying it off before the year ends.
Sure, you’ll get IRS letters and you’re going to owe interest and penalties, but at least you won’t have to go through giving them information on how to set up an installment agreement or give them financial information about you.
But let’s be real,
sometimes we get into debt for a variety of reasons, like we didn’t pay any taxes at all, we paid the tax late but didn’t pay enough to cover the interest and penalties, or we file the return late and accumulate fees and penalties and interest.
And then there’s life, which just happens. Maybe you had taxable income but an emergency came up, or maybe you just plain old neglected your taxes. Hey, it happens to the best of us, right?
But if you really get in deep with the IRS and owe a significant amount,
it’s time to consider an offer in compromise. Basically, it’s like declaring bankruptcy only with the IRS.
And who wouldn’t want to do that, right? In order for that to happen, you’re going to have to send the IRS every piece of information about you financially.
And I mean every piece. They’re going to find it all anyway, so you might as well save them the trouble.
It’s a bit of a process, but if you can show with all that financial information that you’re not making enough money to pay the tax back in a reasonable amount of time, they might take a settlement.
And by settlement, I mean you could end up paying less than what you owe, but the IRS will say we consider it paid in full.
It’s like magic, but with less rabbits and more numbers.
And remember, the #IRSsucks
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