How to Pay Back Taxes When You Don’t Have Cash
- August 15, 2017
- Posted by: [email protected]
- Category: Loans, Taxes
Almost half of taxpayers end up a tax year owing taxes and going into a new one with debt. The one half that successfully pays off their taxes is the happy bunch but what about those owing taxes?
The first hope for those people is that the amount they owe in taxes is not too great. Even if the owed amount looks high, panic will not solve the situation. There are different options to consider to pay back taxes
RE-Finance Your House
Even though re-financing is replacing one debt with another, this method is sometimes recommended by the IRS. Using an equity, you have to resolve your tax debts is a good option if you actually have equity.
It is possible to deduct mortgage interest on taxes unlike interest on credit cards and mortgage rates are actually low. This method is a huge step and you should be sure you can afford it before going forward. If you can turn assets into resources as a way to pay back your taxes, you should take it.
Consider an OIC (Officer in Compromise)
In this method of how to pay back taxes, the IRS considers factors like your expenses, income, asset equity and ability to pay and allows you to settle the debt for less than the amount. If the IRS determines they cant collect all you owe in the time they have you can get this OIC.
Put in on Your Credit Card
This is basically replacing debt with another debt but it is better to put it off to another time than to just sit and look at how you cannot pay your taxes. This method of how to pay back taxes is simple because the IRS receives major credit cards.
The processing companies will charge a small percentage when you make a tax payment with your card but the IRS will not. Service providers might even require special coordination if the amount to be paid is in hundreds of thousands of dollars.
Enter an Installment Agreement
Entering an agreement of installment payment with the IRS means you don’t have to pay back in full all at once but you can only be granted the permission for this agreement if the taxed you owe are under $50,000.
Request Extension of Time
This method on how to pay back taxes allows those owing taxes to extend their time to pay by making an online payment agreement application. depending on the circumstances, you can be given another 60 to 120 days to pay all tax debts in full. This can even result to lesser interest and penalties than before.
No matter how you pay back your taxes, don’t ever choose to ignore the IRS because a solution is better than none since the problem will not go away until you work towards it. Frustrating liens, levies and maybe even prison faces those who ignore their taxes until it gets too bad. Take advantage of these options on how to pay back taxes to make things right.