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Owe The IRS Money This Year? Know Your Options https://ift.tt/2WtLulQ For some taxpayers, tax season means a consistent refund. However, for C-suite executives and business owners who have to write a check to the government, tax season represents dealing with changing uncertainty. Uncertainty because changing tax rules have made previous deductions (entertainment deduction) obsolete and slashed tax rates (for corporations). For many, tax season is about tackling the unknown, which can be nerve racking for many taxpayers. Are my tax returns going to be filed on time? Are my tax returns accurate? If you owe the IRS money this year, it is important to know your options.
What do I do if I owe the IRS money?
The questions can be endless and the last question — what to do when you owe money — can keep some taxpayers up at night. The thought of owing the IRS money is unsettling and unpleasant at best. You worked hard all year, you’ve cashed bonuses and made investments or more bets, and now you have to pay more money in taxes?
So what are your options if you owe the IRS money?
Exploring Your Options If you find that you owe the IRS money this year, it is important to explore your options. The IRS offers several options for paying taxes, which method of payment you choose will depend on how much you owe and your personal situation. You may want to seek the advice of a tax advisor before proceeding to see what makes the most since for your situation. Some options for paying the IRS include:
Installment PlansLike we said before, the IRS wants their money so they want to make it as easy to pay them as possible. While the physical act of parting with your hard earned money is anything but easy, setting up an installment plan with the IRS is pretty simple. The easiest way to to do this is to apply online. First you must set up an account with the IRS, which you can do here.
Installment Plan FeesThe IRS offers several ways to pay with installment plans, the best one is automatic withdrawal from your checking account. This is the most affordable option to set up. If you set it up online the fee is $31, if you set it up over the phone, mail, or in person the fee is $105. If you decide you want a little more control over the payments and elect for non automatic payments, the set up fee is $149 online, and $225 by phone, mail, or in person.
In addition to the set up fees, the IRS charges interest on the balance owed. Initially, any unpaid balance is subject to the short term federal rate, which fluctuates on a regular basis. Once an installment plan is set up, the rate drops to .25%.
It is important that payments are made on time. Failure to pay can result in the IRS cancelling the installment plan. Full Pay AgreementsIf you are unable to pay your tax bill right away, but can pay the full amount within 120 days, you can set up a full pay agreement with the IRS. Again, you need to set up an account first. Then you can apply for an online payment agreement. If payment is made before 120 days, no fee is accessed. However, the unpaid balance is still subject to penalties and interest until the balance is paid in full.
Paying By Credit CardMany taxpayers elect to pay by credit card if they owe the IRS money. This is a simple and quick solution. If this option is available to you, please be advised that card processing fees will apply. These fees vary depending on the service provider. In addition, the the amount is over 100 K, special coordination may be required from your service provider.
Reduce Your Risk of Owing MoneyNobody wants to be in the position to owe the IRS money, so it is important to reduce your risk of owing money. Proper tax planning can help reduce the risk. Tax planning can help with:
Aside from owing money to the IRS, you don’t want to owe more money in late fees. The IRS does not take kindly to late returns, and will assess a 5% fee on the balance owed for tax returns that are filed late. Even if you cannot pay right away, don’t file late. You don’t want to get slapped with failure-to-file fees and failure-to-pay fees. Failure-to file fees are more costly than failure-to-pay fees and can really add up quickly. If you absolutely cannot file, be sure to file and extension before the tax deadline. Remember, when it comes to preparing and filing your tax return always file accurate returns on time.
Do you have more tax questions? Contact the tax experts at The Tax Hack Accounting Group. The post Owe The IRS Money This Year? Know Your Options appeared first on Social Media Explorer. Social Media via Social Media Explorer https://ift.tt/2onGYog March 31, 2019 at 03:53PM
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