For any law-abiding citizen, paying taxes is a duty because it’s the primary way to help their country’s economy. For this reason, many people ensure that they pay their taxes. While this isn’t a problem for most people, some have difficulty paying taxes for various reasons, such as not having enough money.
Not paying taxes on time can lead to increased penalties based on the amount. For example, if a bill is more than $100,000, the penalty is around 75 percent of the amount owed. If a person is late with a payment of more than $10,000, then the interest rate can be as high as 10 percent. Conversely, not paying taxes can lead to criminal charges, including fraud. While the thought is certainly daunting, the good news is that there are specific steps that you can take to avoid the penalties of not paying taxes on time. These include:
#1 – File Your Return on Time
The first thing you should do is file your return on time. While the deadline is usually around April, the IRS can extend this deadline if your taxes are not due yet. However, if you think that you might not be able to pay your taxes on time, you should still file your return as soon as possible.
Additionally, it also helps if you file for an extension. You should note the date you filed your return to have a legal excuse for why you are late. This date should be clearly stated so that the IRS will know how to proceed with your application.
#2 – Determine Your Options for Paying
You should make sure that you ask the IRS how much you owe and how you can pay your taxes on time. The IRS should be able to tell you how much you owe in taxes. If you can’t pay your taxes in full, the IRS will likely allow you to pay your taxes on time by making smaller payments regularly. You should then speak with a tax professional to help you determine how you can pay your taxes on time.
#3 – Monitor Your Timeline
If your taxes are due in April, you should probably know when your taxes should be done by. However, make sure that you monitor your timeline at all times so that you can comply with the IRS. For example, if you think that you might not be able to meet your deadline, you should file for an extension.
You can also contact the IRS if you have questions about the filing process. You should also know the penalties of not paying your taxes on time. You will be prepared if you have to pay the fine for not paying your taxes on time.
#4 – Consider Arranging an Installment Agreement
If you still have difficulty paying your taxes, consider an installment agreement. This allows you to pay your taxes off over time. For example, if you can’t pay in full, you can pay a small amount. You can then pay a little more each month until you have paid your taxes in full.
It’s also worth noting that an installment agreement can be canceled. This means that you can still pay your taxes in full if you have trouble with payments.
#5 – Utilize an Offer in Compromise
An offer in compromise (OIC) is another strategy for paying your taxes. This requires you to make an offer to pay a certain percentage of the amount owed in exchange for a reduction of the amount due. For example, the IRS can accept an OIC if you cannot pay the due amount. However, the IRS can reject your OIC, even if you have an offer to pay more than the amount owing in full.
You should note that an OIC can be tricky. For example, if you believe that you can pay your taxes in full, you should avoid using an OIC. If you are wrong, the IRS can force you to pay more than the amount due.
While paying taxes on time is the best way to avoid penalties, not doing so can harm your life. However, paying your taxes on time can be challenging. If you’re having difficulty, you can take the steps mentioned above. Just remember to file your return on time to communicate effectively with the IRS.
If you’re looking for tax relief solutions, Axiom Tax Resolution Group can help you! We understand how difficult it is to pay taxes on time, so our tax professionals will develop solutions to ensure that you’ll avoid heavy penalties from the IRS. Reach out today and allow us to help you!