Struggling with unpaid taxes? Discover your options before the October 15 deadline and learn how to set up a manageable payment plan.
This year's federal tax deadline was April 15, with taxpayers allowed to apply for a six-month extension using Form 4868. However, while the extension gives you more time to file, the taxes were still due on April 15, which might result in penalties and interest on unpaid sums. "That's a surprise to a lot of people," said Josh Youngblood, an enrolled Dallas agent.
If you missed the deadline, the late payment penalty is 0.5% of your outstanding total per month, up to 25%. In contrast, the failure-to-file penalty is 5% of the unpaid taxes, with a maximum of 25%. Taxpayers in catastrophe zones may be granted both an automatic extension to file and additional time to pay.
If you are unable to pay, it is critical that you complete your return, since the IRS provides payment options for individuals who are current on their filings. After submitting your return, you can look at numerous online payment methods. Many filers get fast feedback on payment plan requests. "If you owe less than $50,000, establishing a payment plan is almost automatic," said Tom O'Saben, director of tax content for the National Association of Tax Professionals.
The IRS payment arrangements include:
1. Short-term payment plan: For sums less than $100,000, with up to 180 days to pay in full.
2. Long-term payment plan: For sums less than $50,000, monthly payments can be made for up to 72 months.
3. While late payment penalties and interest continue to accrue, a payment plan may help you avoid late fees. However, future tax refunds may cover delinquent debt.
If you find yourself with delinquent taxes, remember that communication with the IRS is essential. Ignoring alerts will not solve the situation; it is critical to stay proactive. "The IRS is not as bad as people think," Youngblood assures us. "They genuinely want to work with individuals and help them find a solution."
Please do not hesitate to contact us for assistance and to discuss your payment choices. By taking action immediately, you can reduce the stress associated with tax liabilities and work toward a manageable solution. Filing your return and creating a payment plan might provide you peace of mind, allowing you to move on without the burden of unpaid taxes. So, if you're in a tough place, take the first step now.
