3 Options to Consider When You Cannot Pay Your Taxes

tax

While most of us know we need to pay taxes each and every year, some people certainly find it easier than others when the time comes. Every year, plenty of Americans fall behind on their taxes for one reason or another.

Some of these people may simply file/pay them late or forget them when life gets in the way, but others may not be able to pay them at all. If you find yourself in the latter group, it can be incredibly stressful.

But don’t worry, you have options. This guide is going to take you through a few different options you should consider when you cannot pay your taxes.

Go to the IRS for Assistance

One of the first places you should reach out to is the IRS themselves. If you voice your concerns, you may qualify for a payment plan or installment agreement that allows you to pay your balance over time, making everything much more manageable. Other options include asking for more time or making an offer in compromise.

You can also look into the IRS Fresh Start Program as an option to help get you back on track (This guide from Tax Law Advocates does a great job of breaking down the program). All in all, the IRS has several different avenues for helping those unable to pay taxes, so don’t hesitate to take advantage of them and see if they can help you in your unique situation.

Also, don’t hesitate to reach out to and work with a tax professional to help go over these options and see which makes the most sense to you.

Borrow Money

Loans

Next, if you cannot receive help from the IRS or decide to go a different route, borrowing money can be a good way to get the funds you need to pay your taxes. There are many ways to borrow money that can be used such as your credit card, a line of credit, taking out a loan, asking friends or family, or securing a HELOC or home equity loan.

These methods can get you the money you need to satisfy the IRS and ensure you are in good standing. Sure, they can be expensive in some cases, so you need to weigh that against the potential penalties or fees coming from the IRS.

Of course, make sure not to land yourself in an even bigger financial problem by being taken advantage of by predatory lenders, so always read the fine print and know what you are getting into before signing anything.

Pay What You Can

If all else fails and you cannot get assistance, a good option is to simply file and pay what you can afford at the time. This may not be a lot, but at least it can put a dent in the total amount you are responsible for paying.

While you will still owe in the future, the more you pay now, the less you will have to pay in interest and penalties. Once you are in a better financial position, you can pay the rest (plus penalties) to get yourself back in line.

In conclusion, we hope that this article has been able to help you if you are struggling to pay your taxes.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.