The new filing season is still a few months away. But it will be here soon enough, and you may already be worried about not being able to pay your taxes. Or you may have tax debt from the past that you haven’t resolved yet.
If you are in a situation like this, keep in mind that you have options. In this two-post, we will discuss four possibilities.
First of all, it is worth noting why it is so important to pay your taxes on time or make an arrangement with the IRS to address your debt. In simple terms, it comes down to money. If you don’t pay on time, you get hit with a late-payment penalty, plus interest on the unpaid taxes.
Take out a personal loan?
One option for getting your taxes paid despite financial challenges is to somehow raise the money to do so. We’re not saying you want to trade tax debt for credit card debt. But it may be possible to get a personal loan from a bank or credit union. Or perhaps a family member would be willing to lend you the money. In any case, it is something worth considering.
Set up a payment plan?
Another option for getting your federal taxes paid is a short-term payment plan. If you qualify, you can arrange to get more time to pay your bill in full by spreading out the payments over a period of up to 120 days.
The IRS tries to make it easy to set up such a plan by allowing online applications.
But what if you need more than 120 days to pay your tax bill in full? In part two of this post, we will discuss two options for addressing this situation. One is an installment agreement. The other is an offer in compromise (OIC).