What to Do if You Can’t Pay Your Taxes

Tax day is only a few days away.  Some people will receive money from the government while others won’t be as lucky.  Those individuals who are unable to pay their taxes will be placed in a tough position.  If individuals can’t pay their full tax liability, the government may seize their property, take from their assets and wages, or strip their retirement funds, just to get paid.  Therefore, a lot of us will have to figure out alternative ways to pay our taxes.  Below are some options worth considering.

Alternative Payment Options:

• Monthly Installment Agreement:

If you are unable to pay your tax liability immediately, you can apply for an IRS monthly installment agreement.  This can be done by visiting IRS.gov and filling out the Online Payment Agreement application.  You must also fill out a financial statement if you owe over $25,000.  Speak to a qualified tax attorney if you have any questions about this payment option.

• Offer in Compromise:

If you can’t pay your full tax liability, or doing so would produce great financial difficulty, you might consider applying for an Offer in Compromise. If you apply for an Offer in Compromise, the IRS considers your: 1) ability to pay, 2) income, 3) expenses, and 4) asset equity.  In essence, an offer in compromise allows you to pay less than the amount owed by settling your debt.

• Pay by Credit Card:

Although this is an option, I wouldn’t pick this option. Using your credit card to pay your taxes doesn’t sound like a good idea to me.  Credit companies charge a higher interest than does the IRS.  By using a credit card to pay your taxes, you will only put yourself deeper in debt.

Click to learn more about tax law.  For additional information, speak to an experienced tax attorney.