Managing Debt For Dummies
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April 15 is the deadline for filing state and federal individual income tax returns. An extension to file your tax return is not an extension to pay your taxes. Taxes are due on April 15, and the IRS begins charging interest and penalties on your unpaid taxes on April 16. For this reason, paying some of your taxes on April 15 is better than paying nothing at all. The more you pay, the less your tax debt will grow because of interest and penalties.

File your tax return on time, or file IRS Form 4868, “Application for Automatic Extension to File,” which gives you until August 15 to get your return to the IRS. You can download the extension request form from the IRS, order it by calling 800-829-3767, or pick it up at your local IRS office.

If you don’t have the money to pay the IRS, you have options. These options can be costly. It’s a good idea to consult with a CPA or financial advisor about whether any of these options is right for you. That person may suggest that you will be better off asking the IRS to let you pay what you owe in installments or to let you settle your debt for less through an Offer in Compromise.

  • Pay with plastic. You have to pay a convenience fee of 2.49 percent on the amount that you charge to pay your IRS bill. And, of course, if you don’t pay the full amount of your tax debt when you receive your account statement, you pay interest to the credit card company.

    You can’t pay your taxes with a credit card, then declare bankruptcy, and make the debt disappear. Tax bills are not dischargeable in bankruptcy.

  • Use a credit card convenience check. This option is relatively expensive because you probably have to pay a fee to the credit card company for the privilege of using the convenience check. Plus, if you can’t pay off the amount of the check right away, interest accrues.

  • Borrow against your home equity. The good news is that the interest you pay on the borrowed money is probably tax deductible. The bad news is that if you can’t repay the borrowed money, you may lose your home.

About This Article

This article is from the book:

About the book authors:

John Ventura: John is a best-selling author and a nationally boardcertified bankruptcy attorney. He is also an adjunct professor at the University of Houston Law School and the director of the Texas Consumer Complaint Center at the Law School.
As a young boy, John dreamed of becoming a Catholic priest so he could help everyday people, and he spent his high school years in a Catholic seminary. After graduating, however, John decided to achieve his dream by combining journalism with the law. Therefore, he earned an undergraduate degree in journalism and a law degree from the University of Houston Law School. Later, he and a partner established a law firm in Texas, building it into one of the most successful consumer bankruptcy firms in the state. He subsequently began a successful consumer law firm in South Texas.
Today, as Director of the Texas Consumer Complaint Center, he supervises law students as they help consumers with their legal problems. He is also a regular speaker at law conferences around the country and serves on the Bankruptcy Council for the Texas Bar Association.
John is the author of 13 books on consumer and small business legal matters, including Law For Dummies, 2nd edition; The Everyday Law Kit For Dummies; Divorce For Dummies, 2nd edition; and Good Advice for a Bad Economy (Berkeley Books). John has been interviewed about consumer money matters by numerous national media including CNN, NBC, NPR, Bloomberg Television & Radio, The Wall Street Journal, USA Today, Newsweek, Kiplinger’s Personal Finance, Money, Inc. Martha Stewart’s Living, Bottomline, Entrepreneur,,, and In addition, his comments and advice have appeared in major newspapers around the country, and he has been a frequent guest on local radio programs.

Mary Reed: Mary Reed is a personal finance writer who has coauthored or ghostwritten numerous books on topics related to consumer money matters and legal rights. The books she has coauthored with John Ventura include The Everyday Law Kit for Dummies, Divorce For Dummies, and Good Advice for a Bad Economy (Berkeley Books). Mary has also written for the magazines Good Housekeeping, Home Office Computing, and Small Business Computing, and she has ghostwritten numerous articles that have appeared in national and local publications.
Mary is also the owner of Mary Reed Public Relations (MR•PR), an Austin, Texas-based firm that provides public relations services to a wide variety of clients, including authors, publishers, attorneys, financial planners, healthcare professionals, retailers, hotels, restaurants, and nonprofits.
Prior to starting her public relations business and writing career 20 years ago, she was vice president of marketing for a national market research firm, marketing director for a women’s healthcare organization, and public relations manager for Texas Monthly, a national award-winning magazine. She received her MBA from Boston University and her BA from Trinity University in Washington, DC.
In her free time, Mary serves on the board of a community development corporation in her neighborhood. She also enjoys long morning bike rides, road trips with her husband, gardening, working her way through the stack of books by her bed, taking care of her six cats, and spending time with her family and many friends.

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