Taxes and death are the two things that a person can’t escape from. So, if you are falling behind on your tax filing, we have a few ways to help you.You can’t avoid taxes, and it is best to pay them at the right time. However, a few circumstances can make it challenging to keep up with your tax payments. As a result, you fall behind on your tax filings and won’t know what to do about it. In such instances, a tax planning advisor can assist you with tax problems. But it’s also crucial to take the right precautions to avoid getting into trouble with the IRS.To help you out, we’ll cover seven ways to help you resolve your issue regarding falling behind on your taxes. So without further ado, let’s get right into it.
7 Things You Can Do If You Are Failing Behind On Tax Filing?
Owning taxes can increase stress and anxiety, especially if you have been avoiding them for some time. You might face some penalties and fines, and in some cases, there is also a chance of going to prison. Nevertheless, here are seven ways to help you out with this problem.
Talk to IRS and Set up a Payment Plan With Them
One of the best ways to deal with this issue is to sit with the IRS and set up an installment plan. The IRS allows taxpayers to pay the amount they owe in installments. This contract between the taxpayers and the IRS is an installment agreement. The terms and conditions of the installment agreement will vary from case to case, depending on the amount you owe and how soon you can pay them back. First, you must fill out “Form 9465” to request the installment plan. If you want an installment agreement of $50,000 or less, you won’t have to give your financial statements. Also, you can get personal tax preparation services to assist you with filing the relevant form and documentation. If you choose this option, it will cut down the penalty on your unpaid balance by 0.25% per month. However, the IRS will void the agreements if they fail to keep up with the payment schedule.
Request a Short-term Extension to Clear the Dues
If you are falling behind on your tax filing but can clear out the dues quickly, this is a more suitable option. The IRS allows taxpayers around 4 months (120 days) to clear out their dues and pay the tax balance in full. The best thing about this option is that you don’t have to pay a fee to request an extension. Also, you would only have to pay a penalty of 0.5% per month on the amount you owe to the IRS.Choosing the option allows you to clear out the dues with the IRS. Also, you won’t be tied to an installment contract for too long, and we will resolve this issue quickly. You can take assistance from a professional that provides personal tax preparation services to assist you with it.
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Take a Personal Loan
If you have been falling behind on taxes for quite some time, then the ideal thing is to get a personal loan and clear out all the dues. This will save you from facing any fines and penalties for your taxes. You can ask your friends and family members for a personal loan to pay your taxes. It is convenient since you won’t have to pay any interest on the amount you borrow from your loved ones.
Apply for a Hardship Extension
Another thing you can do if you fall behind on taxes applies for a hardship extension. The IRS allows taxpayers various options for people in hardship situations, such as not collectible status and the offer in compromise.However, you need to check the IRS financial standards to see if you fit into the eligibility criteria for this option. While you won’t have to pay any taxes for it, you would have to pay a short interest on the amount you owe.
Borrow from your Retirement Savings Plan
Taking out money from your retirement savings plan, such as 401(k), is another way to pay the IRS when you fall behind on your taxes. You have to check your tax plan to see if they let you borrow money to pay back your current taxes or the ones you owe. One thing to remember is that taking a loan could adversely affect your retirement plan. Also, the loan will be a taxable distribution if you:
Terminate the plan
Resign from your company without repaying the loan
Fail to make payments on time
Hire a Professional for Personal Tax Preparation
If you don’t know how to talk with the IRS, it is best to find a professional expert to assist you with the services. Find a reputable and well-known tax planning advisor to assist you in choosing the right option, depending on your case. They will analyze each aspect of your tax situation and provide you with different options. You can choose any one of them as per your choice. Also, tax professionals can deal with and negotiate with the IRS on your behalf.
Take Out a Loan or Pay through a Credit Card
Lastly, if you don’t find a way to pay your taxes, then consider using your credit cards. You can find many service providers willing to let you pay the taxes you are falling behind through the credit card. However, remember that it is an expensive option since the interest on the non-collateral can be pretty high. Also, it can hurt your credit score, making it difficult for you to get other loans. So, it is best to consider this as the last option if you are falling behind on your taxes.
Failing behind on your tax filing can lead to penalties and fines. Nevertheless, taking the relevant steps mentioned in this article is crucial to get out of this problem. And if you need any assistance with it, then our professionals are here to help out with it. They can understand your case and provide relevant solutions for your tax problems.