I Owe, Now What?
- Author Cora Parks
- Published February 24, 2011
- Word count 708
In the aftermath of the tax season, there are some of us that have taxes due to the IRS that were not paid on April 15th. Given the economy, in a lot of cases, people simply did not and still do not have the resources to pay their necessary living expenses, let alone unforeseen IRS debt that in most cases was not fully known until close to April 15th. By then, it was too late to address what went wrong and who is to blame. Unfortunately, a lot of us are tapped out on credit cards that might have been used to pay the balance, or that home equity line of credit that we came to depend on dissipated with the housing crash. If your credit rating took a dive, your bank or credit union probably considered you to be too high risk for even a signature loan unless you had collateral. Though we cannot personally pay your taxes for you, happily, we can offer solutions (now and over the next few weeks, so stay tuned) for a great majority of individuals that they can use to deal with their IRS debt.
I trust that you filed your return by April 15th to avoid the late filing penalty. Inevitably, you will be charged a late payment penalty of .05 percent on a monthly basis until your taxes are paid in full. Not only that, the unpaid balance will accrue interest. The current interest rate is 4%, compounded daily. Of course, how much interest and penalty you ultimately pay will be directly correlated with how long you need to pay the balance. What follows today and over the next few days are a series of scenarios and solutions depending on where you are currently seated financially. In the future, we will address in depth matters regarding balance due accounts.
Scenario 1: I owe a small balance (under $1000) to the IRS. I do not owe taxes currently and have never owed before. I could not pay in full on April 15th but I can pay in full by the end of May with a bonus that I am expecting. If this falls through, I can definitely pay the full amount at the end of June. What should I do?
Solution: For those that only need a few weeks to a few months to pay in full, consider an extension of time to pay. This option will allow you up to 120 days in which to pay your balance in full. The time commences as of the day that you make the call. You will not receive monthly reminders, only a verbal and in a few cases, a letter as your evidence of establishing the extension. It is your job to ensure that the full payment is made by the agreed upon date. If you do not receive a confirmation letter within 2 weeks, call and request one be sent for your records.
Though there is no user fee for this option since it is short term, applicable interest and penalty charges will accrue until your balance is paid in full. Rule of thumb: the lower your balance and the faster that you pay the taxes off, the lower your overall charges will be for interest and penalties.
In order to initiate this option, you are required to have filed your return and received a notice. You cannot have a current installment agreement on file with the Internal Revenue Service with respect to prior year taxes owed. When you receive your notice, contact the IRS at 1-800-829-0922 to initiate your request for fastest service or you may write to the address shown on the letter. Since it takes 30 days or more for a response, you may want to take care of this matter over the telephone.
It goes without saying that if you cannot pay in full as agreed by the due date, contact the IRS at the above number and let them know. Otherwise, you will get a letter in the mail requesting the remaining balance due, assuming payments were made. Failure to do so may result in your account being elevated to Collections. In this status, bank levies and paycheck levies have been known to occur. Don't let this happen to you!
Cora Parks is a lifelong Atlantan whose vision is to bring year round proactive tax counsel and personal responsibility to the masses. Besides the Tax Today blog, she has published Everyday Tax Tips, Part I" and "Beware Of Preparer".
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- The Transformative Power of Yamaigel’s Certified Gel Eye Masks
- Checking account with cell phone protection!
- Keeping Cool This Summer: Air Conditioning Installation Services in Milwaukee
- A DIY Guide to Fixing Your Garage Door (with a Call to Garage Door Magnolia When All Else Fails!)
- Can a Bent Garage Door Be Bent Back into Shape? Don't Panic, Call Kiki Garage Door!
- How Can I Tell If My Garage Door Opener Sensor Is Bad?
- Maximizing Profitability: The Economics Behind Customizable Design Assets
- Exploring the Hidden Gems of Si Racha, Thailand
- DIY vs. Professional Movers: Pros and Cons in 2024
- MK Web Celebrates Top Position in Bourne's Premier Web Design Rankings
- The Road to Sobriety: Understanding Substance Use Disorders
- MotorKote Ultimate 40/60 Synthetic Hyper Mix 5W-30
- Exploring Denver on a Dime: A Frugal Travel Guide
- Top 10 Ways Production Scheduling in Business Central Transforms Manufacturing
- Strength Training and it's Incredible Benefits for Fat Burning
- Enhancing Home Security with Aluminum Shutters: A Focus on Weatherwell Elite
- 5 Easy Ways to Make Oral Hygiene Fun for the Whole Family
- Transforming Plastic Extrusion Machines into Recycling Powerhouses
- Unraveling the Potential of Plastic Extrusion Machines
- The Rise of Plastic Recycling Machines: A Step Towards Sustainability
- Strawberry Cheesecake Ice Cream: OMG! Unreal!
- The Advantages of Using Professional Home Cleaners in Ilford
- 8 Compelling Reasons to Hire Professional Home Cleaners
- The 12 Steps Narcotics Anonymous Program To Recovery
- Send Money to Tanzania: Effortless Transfers with SafariRemit
- Stylish Savings: 10 Frugal Ways to Stay Fashionable in 2024
- Fly Cheap With FlightPapa To Any City
- How Collaborating with a Software Development Company Can Propel Your Business Forward
- A Comprehensive Guide to Choosing the Best Hair Transplant Method
- 15 Frugal Tips for a Memorable Wedding Day