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What Should I Do if I Cannot Pay My Taxes That Have Come Due?

Posted on in Tax Services

San Antonio tax help for IRS installment agreementsAs Benjamin Franklin once said, “In this world, nothing is certain except death and taxes.” Each year, millions of Americans are required to file income tax returns to determine whether or not they still owe the Internal Revenue Service (IRS) income tax or if they will be receiving a refund. According to the latest data from the IRS, there were nearly 158 million people who filed a tax return in 2020 for the 2019 tax year. The majority of tax filers receive a refund, but there are still plenty of people who file their taxes and have not yet satisfied their income tax liability. Nearly 30 million of those filers had tax due at the time of filing. When this happens, you will be required to pay this amount, or you could face consequences.

How to Deal With Income Tax That Is Due

If you have gone through the steps of completing your tax return, and you determine that you owe income tax, it is extremely important that you pay your taxes on time. If you do not pay on time, you will be subject to monetary penalties, and you could face further consequences. Here are a few ways you can deal with a tax bill that you cannot afford right away:

  • Use a short-term payment plan. A short-term payment plan is considered to be one that lasts for 120 days or less. This type of plan has no setup fee, but your account balance will continue to accrue penalties and interest until the balance is paid in full. 

  • Request an installment agreement. One of the most favorable options for those who are unable to pay their tax bill in full is an installment agreement. If you request an installment agreement from the IRS, you can choose between a direct debit installment agreement, which has a $31 setup fee, or a normal installment agreement, which has a $149 setup fee but allows you to make monthly payments until the balance is paid in full. 

  • Ask for an offer in compromise. As a last resort, you can ask the IRS for an offer in compromise, which would allow you to settle your tax debt for less than the full amount owed. Essentially, you offer the IRS an amount that you believe you can afford to pay, and the IRS will determine whether or not it is sufficient to satisfy your tax liability. Offers in compromise are only accepted in certain circumstances, as the IRS considers an individual's ability to pay, income, expenses, and asset equity prior to making a decision.

A South Texas Enrolled Tax Agent Can Explain Your Options

Simply just ignoring your tax bill is never a good idea. If you do not file a tax return or pay your tax bill, you could face severe consequences that could affect you for years to come. At Ed Villanueva & Associates, Inc., we know that 2020 has been a difficult financial year for many people, but avoiding your tax bill is not the answer to your problems. If you are unable to pay your tax bill, contact our Corpus Christi, TX enrolled tax agent to learn more about the options available to you. To schedule a free consultation, call our office today at 210-382-9015.

Sources:

https://www.irs.gov/payments/payment-plans-installment-agreements

https://www.irs.gov/payments/offer-in-compromise

 

https://www.irs.gov/statistics/filing-season-statistics

 

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