Finding out that you owe taxes when you don’t have enough money to pay can be stressful. You may be worried about what the IRS will do or think that avoiding the problem is your only option.
The important thing to know is that owing taxes does not mean you are out of options. There may be ways to handle your tax bill even if you cannot pay the entire amount right now.
File Your Tax Return Even If You Can’t Pay
One of the biggest mistakes you can make is deciding not to file your tax return because you cannot afford the amount you owe.
Filing your taxes and paying your taxes are two separate things.
Even if you cannot pay the entire bill, you should generally file your return by the deadline. Filing late can create additional penalties and make the situation more difficult.
If you know you owe money, don’t ignore your tax return simply because you don’t have enough money to pay it all at once.
Pay What You Can
You may not have enough money to pay your entire tax bill, but you may be able to pay part of it.
Paying what you can may help reduce the amount of interest and penalties that can build up on the unpaid balance.
For example, if you owe $2,000 but can only afford $500 right now, paying the $500 reduces the amount that remains unpaid.
You can then look at your options for handling the remaining balance.
You May Be Able to Make Payments
Depending on your situation, the IRS may allow you to set up a payment plan.
Instead of paying your entire tax bill at once, an approved installment agreement lets you make payments over time.
The amount you pay and how long you have to pay can depend on how much you owe and your financial situation.
Interest and certain penalties can continue while you are paying your balance, so it is important to understand the terms of a payment plan before setting one up.
Don’t Ignore IRS Letters
If you owe taxes, you may receive letters or notices from the IRS.
Don’t throw them away or leave them unopened.
An IRS notice usually explains why the IRS is contacting you, how much it says you owe, important deadlines, and what you can do next.
Ignoring tax notices generally doesn’t make the debt disappear. Addressing the situation early can give you more time to understand your options and decide what to do.
Keep copies of any letters you receive along with your tax returns and other important tax documents.
Local Tax Can Help You Understand Your Options
If you owe taxes and aren’t sure what to do, Local Tax can help you understand your situation.
We can help review your tax documents, prepare your tax return, explain how much you owe, and help you understand possible next steps.
Whether you owe a small amount or have fallen behind on previous tax returns, getting help early can make the situation easier to understand.
Don’t avoid filing simply because you’re worried about the amount you owe. Start by finding out exactly where you stand.
Local Tax
9429 Somerset Blvd
Bellflower, CA 90706
(562) 925-2203