Dealing With A Tax Bill That's More Than You Can Pay
Sometimes taxes can be surprising. There are times when you may discover that you owe more to the IRS or to the state than you thought -- and at that point you might wonder what options are available to you. Though you should see a tax professional as soon as possible, don't worry. A lot of people end up in this situation and there are ways to remedy it.
Get Your Taxes Reviewed
If you've never had to pay a large tax bill before, it's possible that there's something missing in your return -- such as business deductions if you're a business owner. Before you take the step to remedy your payments, you should get your taxes professionally reviewed for any errors.
File Your Tax Return
Filing a tax return is separate from paying it. In fact, ideally you should be paying your taxes and then filing a return later. But either way, you're going to face penalties for not filing your taxes on time even if you can't pay the bill. File your taxes before they're due (or as soon as possible) to avoid harsher penalties.
Request a Payment Plan
The IRS lets you request your own payment plan by specifying the amount that you can pay every month and when it can be auto-deducted from your account. The IRS will then either approve or disapprove your payment plan, usually fairly quickly. States operate the same way, but you'll need to check with your individual state to determine whether you actually owe taxes. Regardless, a payment plan is usually the best way to get caught up.
Changing the Way You Pay Taxes
Once you've dealt with your tax payments, it's time to make sure this never happens again. A tax bill is intended to be paid when you make your income, not at the end of the year. If you're not currently paying your estimated taxes on a quarterly basis, you probably should be. This will reduce the chances that you'll end up with a hefty annual bill.
It's never pleasant to deal with an unexpectedly high tax bill, but with the help of a payment plan and some careful future planning, you can avoid a significant financial blow. The worst thing you can do in this situation is avoid it. By connecting with the IRS and your state tax department, you will usually be able to find a solution that works for you.
For more information, contact a local company like HBE Becker Meyer Love LLP.