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| Buffington Pockets, Valley of Fire area, southern Nevada (Photo credit: Wikipedia) |
It happens. You do your best to prepare for the tax you’ll owe, but here it is, time to pay your taxes and you just don’t have the money. The IRS recently published their Tax Tip 2012-64, which relates five tips when you’re faced with just this situation. Below is the text of the Tip.
Tips for Taxpayers Who Can’t Pay Their Taxes on Time
If you owe tax with your federal tax return, but can’t afford to pay it all when you file, the IRS wants you to know your options and help you keep interest and penalties to a minimum.
Here are five tips:
- File your return on time and pay as much as you can with the return. These steps will eliminate the late filing penalty, reduce the late payment penalty and cut down on interest charges. For electronic and credit card options for paying see www.IRS.gov. You may also mail a check payable to the United States Treasury.
- Consider obtaining a loan or paying by credit card. The interest rate and fees charged by a bank or credit card company may be lower than interest and penalties imposed by the Internal Revenue Code.
- Request an installment payment agreement. You do not need to wait for IRS to send you a bill before requesting a payment agreement. Options for requesting an agreement include:
- Using the Online Payment Agreement Application and
- Completing and submitting IRS Form 9465-FS, Installment Agreement Request, with your return.
- Request an extension of time to pay. For tax year 2011, qualifying individuals may request an extension of time to pay and have the late payment penalty waived as part of the IRS Fresh Start Initiative. To see if you qualify visit www.irs.gov and get Form 1127-A, Application for Extension of Time for Payment. But hurry, your application must be filed by April 17, 2012.
- If you receive a bill from the IRS, please contact the IRS immediately to discuss these and other payment options. Ignoring the bill will only compound your problem and could lead to IRS collection action.
If you can’t pay in full and on time, the key to minimizing your penalty and interest charges is to pay as much as possible by the tax deadline and the balance as soon as you can. For more information on the IRS collection process go to or see www.IRSVideos.gov/OweTaxes.
