Can’t Pay Your Tax Bill? Here Are Your Tax Preparation Options.

When you’re faced with financial difficulties, the thought of having to pay taxes owed is almost unbearable. How can you pay what you can’t afford? Even if you can’t afford it, you are still legally responsible to pay both state and federal taxes.

Fortunately, you have options when you are faced with tax debt that you are unable to pay at the moment. Ferguson, Timar & Company has put together the following tax tips that will help you make the right decisions:

1. Always File Your Tax Returns
No matter what you may or may not be able to afford, you must file a tax return both to the IRS and to your state’s Franchise Tax Board. Not filing a return will only compound your financial problems; penalties could be assessed, and you would then owe even more.

2. Pay Whatever You Can as Soon as You Can
If you cannot afford to pay the full amount owed when you file your taxes, send in anything you can. Even if it’s five or ten dollars, whatever you send in will show the IRS good faith that you are trying to pay off your debts.

3. Consider Your Options for Paying the Balance
When you do have tax debt, you will want to determine all your options for getting the money necessary before you receive an assessment notice. You may need to use a combination of methods, such as:

  • Borrowing money from friends or family
  • Using a credit card, knowing the interest may hurt you later
  • Taking out a loan or cash advance
  • Selling some of your extra possessions
  • Taking a second job, or starting a side business

Make every effort to pay off your tax bill before even more costly fines and penalties are assessed.

4. Arrange an Online Payment Agreement
For all tax debts of less than $50,000, you have the option to apply for a basic online payment agreement with the IRS. It is free to apply, but the agreement is subject to approval. If the agreement is approved, you will need to pay a setup fee, but ultimately the online payment agreement may allow you to pay off your taxes over time with payments you can afford.

5. Pay in Installments
An installment payment works similarly to an online payment agreement in that you will need to get approval from the IRS. Installment payments can be made in multiple ways: checks, direct debit payments, payroll liens, or future tax returns. However, you will be required to submit a personal financial statement in order to be approved for an installment payment.

6. Seek Assistance from Experts
One of the best things you can do is get help and advice from accounting experts who specialize in tax preparation services. Ferguson, Timar & Company is here as a resource to help you navigate through all your tax preparation and tax debt challenges. We can help you explore your debt payment options, or possibly lower the amount you owe by refiling the return.

Contact Ferguson, Timar & Company today for more information about tax debt relief and tax preparation services that will minimize what you owe, or maximize what you get in return.