You owe taxes. You can’t pay. Now what?
April 18 is fast approaching.
If you haven't filed your income tax return because you owe the IRS and can't pay, time is running out.
Following our steps can help resolve your tax situation:
File your return. Your tax return is finished, so there is no point in delaying the inevitable. Don't make the mistake of filing late -- or worse, not filing at all because you owe a tax liability.
There are separate penalties for filing late or failing to file at all. Don't make a bad situation worse by adding additional fees and penalties to what you already owe.
Find some cash. Once you file your tax return, you can now focus on finding cash to pay your bill. Penalties and fees will continue to accrue as long as you owe money. The IRS has considerable power to collect back taxes, including the use of wage garnishments, liens and levies.
To avoid these actions, determine your options. Can you borrow from friends or family? Do you have any money in savings or other assets you can liquidate to pay your tax bill? You may also consider tapping a home equity loan.
Although using a loan to pay your government debt can be costly -- particularly when taking advantage of high-interest credit card advances -- the IRS cautions borrowing could be the cheapest option.
Work with the IRS. There are some situations where finding cash is simply not an option. You might not have access to cash or be unwilling to assume the risk associated with borrowing money to pay off debt.
If this is the case, you should contact the IRS to determine what options are available for repayment. The type of plan available will vary depending on the amount you owe. By working directly with the IRS you can begin making payments immediately and avoid aggressive collection actions.