06 Apr File your taxes on time even if you can’t pay
Q. I will owe taxes this year, but I don’t have the money to pay the bill. What should I do?
A. Even if you don’t have the cash to pay, you should still file your return on time. If not, you’ll end up owing even more, and that won’t be any good. And not filing at all isn’t an option.
As long as you file on time, you won’t face a penalty for filing late, said Joseph Matheson, a certified public accountant with Matheson & Assoc. in Whippany.
“Pay as much as you can with your tax return,” he said. “The more you can pay with the return, the less interest and late payment penalty you will incur.”
You can pay online with IRS Direct Pay, which is an electronic payment option available from the IRS, Matheson said. It allows you to schedule payments from your checking or savings account for no charge and you’ll receive an immediate payment confirmation.
Then, pay the rest of your tax as soon as you can.
“If it is possible, get a loan or use a credit card to pay the balance,” Matheson said. “The interest and fees charged by a bank or credit card company may be less than the interest and penalties charged for late payment of tax.”
Matheson said the IRS offers an Online Payment Agreement tool which allows you to ask for an installment agreement.
“You can use a direct debit plan. When you pay with a direct debit plan, you won’t have to write a check each month,” he said. “If you can’t use the IRS.gov tool, you can file Form 9465, Installment Agreement Request instead.”
You learn more about that on the IRS web site.
But whatever your situation, don’t ignore a tax bill.
“The IRS may take collection action if you ignore the bill,” Matheson said. “Contact the IRS or your CPA right away to talk about your options. If you are experiencing a financial hardship, the IRS will work with you.”
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This story was first posted in April 2015.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.