3 Alternatives when you can’t Pay your Income Tax on Time

Although it is always considered a good things to pay your income taxes on time. But there are times when people are not able to pay for their taxes on time due to one reason or the other.

So here are three alternatives that you can choose from analyzing the penalties that they charge and then choose one of them that you find the most suitable.

Penalties for late filing and late payments

Now once you are late for your tax payments, you may come across two types of penalties

  1. Failure to file on time penalty- here the minimum amount charged is up to 5% ad maximum it can go to 25%.
  2. Failure to pay on time penalty- in this case the minimum that you will be charged is 0.5% of the balance which is due for each month and maximum it can go to 25%.

Thus the failure to file penalty is considered more badly than the failure to pay penalty and the reason are quite obvious.

Now there is a way in which one can actually be able to reduce the amount that is charged as penalty and interest. In this you can first file a deadline and then file and pay for your taxes before the deadline. But make sure that you file your return necessarily before the deadline otherwise you may end up with having even more interest added on to your balance until your next payment.

Take full advantage of your credit card

What you can do here is that contact a service provider who is approved by the IRS and asks them to charge your taxes on your credit cards. Here they will be charging you some fee which is approximately 2.5 percent of the amount that will be paid by you.  But make sure you pay off your credit card balance as soon as possible otherwise you may get incurred by additional interest charges.

Try to negotiate

This strategy may prove to be of great help to you if you use it smartly. And also use method only when you are left with no other choice. So when you aren’t able to collect enough money to pay for your taxes you can try to negotiate one of your investment plans with the IRS. You can request for a payment plan online depending on how much you owe. And if your situation is even worse, you can consider talking to the IRS directly let them know about your situation. Chances are that they may agree they may accept a lesser amount than the full payment.

Conclusion

Thus by adopting any one of the three alternative mentioned above you can help yourself with the late payment of taxes. Thus if you ever forget or are unable to pay for your taxes on time just choose one of these alternative and your life is sorted.

Anum

Anum Yoon is the founder and editor of Current on Currency. She loves all things personal finance, which is why you'll find her work all over the PF blogosphere.

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