As tax season looms, you likely have given some thought to your current financial situation. If you have encountered the problem of not being able to pay your income taxes this year, you might be considering various options, including filing for bankruptcy. While you consider how to respond to this situation, you should review the following five pieces of advice about owing the Internal Revenue Service money.
Promptly File Your Income Taxes
Taxpayers who owe the Internal Revenue Service might want to delay filing their taxes. Doing this, however, is not in your best interest. If you do not file your taxes by the deadline, the Internal Revenue Service can charge substantial penalties in addition to the amount you owe. Currently, the Internal Revenue Service charges 5% of the tax owed for each month that a person does not pay, which is capped once this amount reaches 25%. Even if you cannot promptly pay the full amount you owe, it is still a good idea to file the appropriate paperwork by the filing deadline.
Consider Filing an Extension
If you are not able to file your income taxes by April 2020, it is possible to request a six-month extension. This requires a person to file an IRS Form 4868 and then to submit the document through mail or Easy Extension. Remember that an extension to file does not constitute an extension to pay. Instead, you are still required to pay taxes by the April 2020 deadline or face interest and penalties.
Pay What You can
If you are unable to pay your income taxes by the deadline in entirety, but you can pay a portion, it is always a better idea to pay what you can at the moment instead of paying nothing. Any penalty that you incur will instead be based on the amount that you do not pay. Paying what you can now means you will have to pay less overall.
Consider an Installment Agreement
If you are unable to pay your income taxes by the April 2020 deadline, the Internal Revenue Service offers installment agreements. To qualify for one of these agreements, a person must have filed the necessary forms and owe less than $50,000 when income tax, penalties, and interest are calculated. These agreements let you pay your tax debt over a six-year period with payment options including Direct Pay and payment through either credit or debit card.
Speak with a Skilled Bankruptcy Lawyer
No matter the reason why you are facing financial hardship, it is important to remember that you are not the only one. Each year, many honest people with good intentions end up filing for bankruptcy. If you find yourself needing the help of an experienced bankruptcy attorney to address your financial situation, you should not hesitate to contact the Adam Law Group today to schedule a free case evaluation.