If you owe the IRS thousands of dollars, it can be scary. You may feel like there’s no way out and that the government will take all your money away. But there is hope! The IRS will work with you and find ways for you to pay what you owe without selling all your assets or borrowing from friends and family members.
You’ll be hit with a failure to file a penalty, which is 5% of the taxes owed per month.
The failure-to-file penalty is 5% of the taxes owed per month, with a maximum penalty of 25%. This means that if you are more than 60 days late in filing your return, the IRS charges you an additional 0.5% every day. For example, if it’s been more than six months since you filed your return and have not paid at least 90% of your bill (including interest), the IRS will charge an additional 7.5% penalty for each month of delay plus 5% for every $1,000 left unpaid over 30 days after filing was due; this is usually calculated on total tax owed—not just what remains unpaid—so even if you pay off some or all of your bill after filing has already been due but before any penalties have accrued yet, they can still apply retroactively!
To avoid these stiff fines and penalties associated with non-payment of taxes due to negligence or lack thereof in planning ahead accordingly throughout one’s yearly financial plan so as never get into such financial woes again.”
The IRS doesn’t want you to panic and sells your home or your car.
The IRS will not take your home or car. They may be able to seize those assets if you fail to pay taxes, but they don’t want you to panic and sell your home or car.
You can still file for a tax refund even if you owe the IRS money. It’s best to file an extension if you don’t have the money in time, but the filing does not preclude you from receiving it later in time when your financial situation improves. The IRS also won’t garnish your wages or hold up any other payments until after April 15th has passed, so there is no need for alarm about whether or not someone will come after them at work (unless of course, it’s actually true that no one knows what they’re doing).
You may qualify for an Offer in Compromise.
If you owe the IRS thousands of dollars in back taxes, it can be tempting to avoid paying them at all. However, this is a bad idea and can end up costing you more in the long run. Before you decide to ignore your tax debt entirely, consider whether or not there are any other options for resolving it.
One option for paying off your tax bill is an Offer In Compromise (OIC). An OIC allows taxpayers who have both significant income and difficult financial circumstances to settle their debts for less than what they actually owe the IRS. To qualify for an OIC, you must demonstrate that your monthly income is less than what it would take to repay your balance in five years—and if approved by the IRS, this amount will be set as a lump sum payment plan over 120 months or longer
If you owe state taxes, the laws are different than federal tax law.
Keep in mind that it’s possible for states to have more stringent penalties than the IRS. For example, California has some of the strictest tax laws in the country. If you owe taxes to California and don’t pay them on time, you could find yourself facing interest and penalties on top of your federal debt.
State laws are different than federal tax laws and it’s important to know what they are so that you can plan accordingly when it comes time to make a payment or file an extension.
IRS Tools to Consider
If you cannot pay your federal tax debt in full, the IRS has tools to help you get on a payment plan – and stay on a payment plan.
If you cannot pay your federal tax debt in full, the IRS has tools to help you get on a payment plan – and stay on a payment plan.
Here are some of the ways that federal taxes can be collected:
- The IRS can garnish wages. This means taking money from your paycheck before you get it and sending it directly to the IRS.
- The IRS can take your tax refund (or part of it). You may also have to pay interest and penalties on any amount owed since the date that tax was filed or paid; these charges will be added to what’s already due before releasing any money from an escrow account.
- The IRS can seize other income as well (like Social Security payments), or property like cars or homes (but only if there’s equity above $5,000).
- If none of these methods work for creditors, they’ll go after their last resort: garnishing Social Security benefits themselves — even though they’re meant not just to protect those who need it most but also provide a baseline standard of living while working toward retirement security.”
Conclusion
If you are having trouble paying your federal income tax debt, the IRS offers several options to help you pay off your balance and stay current. You can apply for an installment agreement or an offer in compromise. If you have questions about these programs or other payment plans, contact the IRS at 800-829-1040.