Let’s face it: Getting hit with a tax bill you can’t immediately pay is more common than many think—and it’s no walk in the park. The good news? There’s no need to panic. Here are 5 simple tips to help you manage that pesky tax bill, even when your bank account says, “Really? Now?”
1. File Your Return Anyway
We get it. The temptation to ignore your tax return and hope the problem goes away is real. But trust us, not filing your tax return because you can’t pay is like ignoring a leaky faucet—it only gets worse with time.
Even if you can’t pay the full amount right away, filing your return on time is crucial. Otherwise, you’ll face failure-to-file penalties, which can increase your bill by 25% in a matter of months. So, file that return and avoid giving away more of your hard-earned cash to penalties.
2. Consider Filing for an Extension
Life happens, and sometimes you just need a bit more time to gather the cash. In that case, you can file a tax return extension. It’s like hitting the snooze button, but for your taxes. Filing an extension gives you breathing room until October 15. Remember, this doesn’t get you out of late payment fees, but it does stop the clock on the penalties for not filing, which can be a lifesaver.
It’s easy to file a tax return extension on your own, but if you hire a professional to prepare your tax return, they can file it for you, as well.
Pro Tip: The deadline to request an extension is the same as your initial tax filing deadline. For most individuals, that’s April 15.
3. Ask for a Collections Hold
If you file that return, you have a balance due, and the IRS starts sending those “we need to talk” letters, you can always call the IRS and request a collections hold. The IRS is surprisingly understanding and might give you a month or even three to sort things out, depending on your circumstances. This can give you some much-needed time to arrange payment without the added pressure of immediate action from the IRS.
4. Set Up an IRS Payment Plan
A payment plan with the IRS is often a practical solution if you can’t pay your bill in full right away. Many people don’t realize this option exists, but it can be a true lifesaver.
The IRS offers various payment plans that can stretch your payment over months or even years, making it easier to manage alongside your other financial responsibilities. In general, the IRS wants to be paid back in about 72 months (6 years).
5. Look into an Offer in Compromise
For those facing a tax bill that’s truly beyond their means, an Offer in Compromise might offer a way out. This program allows qualified taxpayers to settle their debt for less than the full amount owed, based on an assessment of their ability to pay. The requirements are strict, so be sure to speak to an experienced tax debt attorney to see if you qualify.
Need a Hand? Reach Out to Gordon Law
Facing a high tax bill can feel overwhelming, but you don’t have to go it alone. At Gordon Law, we’re here to help simplify the process, offering guidance and support every step of the way. Whether you need assistance filing for an extension, setting up a payment plan, or navigating an Offer in Compromise, our team is ready to lend a hand.
If you’re struggling to manage a tax bill, reach out to us. Let’s work together to find a solution that fits your situation. Because when it comes to taxes, a little guidance can go a long way.
