The tax filing deadline will arrive before you realize it. You will soon be collecting receipts and entering data. I know you are hoping for good news and maybe even praying for a large refund.
If everything goes well, you will owe nothing and may even receive a refund. However, what should you do if you owe money? If you owe money to the IRS, you may be tempted to avoid filing a tax return, but that is a terrible idea!
If you fail to file your taxes on time, the IRS will pursue you until you comply. Even worse, the tax agency can impose up to a 25% penalty for a late submission. In addition, interest will begin to accrue immediately.
Instead of not filing your tax return, here are some actions you can take if you owe money to the IRS:
Look for Tax Write-Offs You Can Claim
It might not be all bad if you discover that you owe taxes. You can still contribute to an IRA and reduce your taxable income as long as the April 15th tax filing deadline has yet to pass. This action alone may reduce the amount you owe or even qualify you for a refund, provided that you meet the income requirements for a deductible IRA.
Pay as Much as You Can
If you owe money, it’s best to pay as much as possible as quickly as possible. Even if you file for an extension, the clock will still be ticking on any needed payments, and the penalties and interest can build up quite rapidly.
If you know you owe money to the IRS, it should be your first goal to pay it off. This may necessitate extreme frugality or drastic budget cuts, but it is preferable than paying fines and excessive interest to the IRS.
Contact a Tax Expert
Owing money to the IRS is a serious matter, and taking appropriate steps to resolve the situation is essential. If you cannot pay your tax debt in full, you must contact a tax relief expert as soon as possible for help assistance.
A tax resolution professional can help you navigate the process by preparing, submitting, and negotiating a payment plan that works for you. This way, the IRS won’t get to manage your monthly cash flow. You might also be eligible to settle your case for less than the total amount you owe. This option is known as the Offer in Compromise. Additionally, a tax resolution professional can provide guidance on avoiding common mistakes that could result in additional penalties or interest.
Contact our firm to see how we can help. We negotiate with the IRS day in and day out. We may be able to settle your tax liability for less than you owe. Contact us today to learn more.