What to Do if You Can't Afford to Pay Your Taxes

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If you owe money to the IRS for taxes this season, but you don’t have enough cash in your bank account to cut the check, all is not lost. First things first: Make sure to file your return. That way, you avoid the failure-to-file penalty.

Next, decide how much you can pay. The more you pay down now, the less you will pay in interest and the monthly late payment penalty.

Then, depending on your circumstances, you can request an extra 120 days to pay, either through the Online Payment Agreement application or by calling 800-829-1040.

It’s important you address this now, because if you don’t pay or get an extension, the IRS will send you a bill for the amount you owe, which starts the collection process, somewhere you don’t want to be — both for your emotional and financial state.

If you don’t think you can make the deadline, you have several options:

If You Owe . . .

Less than $300: Put It on Your Credit Card

This is the easiest way to do it. If you are just waiting for a paycheck and can pay it off at the end of the month, there’s no reason not to put it on your credit card. If you think you will be carrying a balance if you use your credit card to pay, use the calculator to figure out how much it will cost you to pay the interest on it. A good rule of thumb is that if you owe the IRS less than $300 and you plan on paying it off within the year, this is a good option.

Read the rest of the article on LearnVest.com.

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