(StraightNews.org) – Every year, millions of people file their taxes. Many end up owing the federal government money, particularly if they didn’t withhold enough throughout the year. Taxpayers must pay this amount when they file or by the tax deadline, which typically falls on April 15. The IRS pushed that timeline back to Monday, April 18, for 2022. Some people won’t have the financial means to pay in full by the deadline — and that’s okay. Take these steps to address the issue and avoid further penalties.
Be proactive about tax obligations. Don’t shelve the debt, thinking it’s okay to wait for the IRS to reach out to you. Taxpayers who anticipate problems paying should take the initiative and contact the agency first. In the end, working with the IRS will result in far less strife and financial penalty than pretending the debt doesn’t exist.
There Are Options Available
The IRS has several financing alternatives for people who can’t afford to pay their liabilities in full. Short- and long-term payment plans can help spread smaller payments out over time.
Short-term plans, which extend payment up to 120 days, don’t require an additional fee. Those who need a lengthier installment plan have to apply and pay a $149 fee. If they sign up for automatic payments, the IRS reduces this cost to $31.
It’s important to note that these options don’t stop penalties — 0.5% per month — or interest from accruing on the balance due. It’s better to pay the debt in full as quickly as possible.
For those experiencing severe financial hardships, the agency has an offer in compromise option, which lets taxpayers settle their debts for less than the full amount they owe. But, be aware the IRS doesn’t just approve all of these applications. There are stringent requirements to qualify.
In rare cases, the IRS may offer a temporary suspension of collection. It marks the taxpayer’s account as currently not collectible and sets the debt aside for when the person’s financial situation improves.
The IRS is more than willing to help those who reach out and take the initiative with various options. That may include a tailored plan if none of the above options work for you.
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