There are a lot of reasons why you may wind up owing the IRS money. Perhaps you didn’t have enough money withheld from your paycheck. Alternatively, if you are self-employed, you may not have paid enough into the tax system throughout the year to offset your self-employment tax. If you had lottery winnings or unexpected income, you may also find yourself owing money when tax time rolls around.
What should you do if you owe the IRS money?
It depends on your situation. It goes without saying that you should pay your tax bill if you have enough money to cover it. It is always best to pay the IRS as quickly as possible so that you don’t have a tax debt hanging over your head.
Alternatively, you can contact the IRS to set up an installment agreement. This allows you to break your debt down into more affordable monthly payments. Keep in mind that penalties and interest will continue accruing on your debt until it is paid off. Because of that, you should make every effort to pay down your debt as quickly as possible. An easy way to do that is by paying as much as you can each month rather than paying the minimum amount that you agreed to.
Pay Bills Using Credit Cards
If you have enough available credit on a credit card, you may also want to consider paying your tax bill with your credit card. That way, you can avoid the penalties and interest associated with past-due taxes. Of course, this option only works if the interest rate on the credit card is lower than the interest that you would have had to pay on your tax debt.
If you have any doubts about your ability to keep up with your payments, it is better to put your debt on a credit card rather than owing the IRS. The IRS has extreme power when it comes to collecting debts. They can garnish your wages or take money directly out of your bank account. Or you can hire Attorneys For Tax Issues who can resolve your tax doubts and issues legally
Credit card companies, on the other hand, don’t have the same reach. All that they can do is turn your account over to collection or take you to court if you can’t make your payments. Even if you plan on paying your bill on time, unexpected events such as the loss of a job can happen. In those cases, it is almost always better to own a credit card company rather than the IRS.
If you owe the IRS money and can’t afford to pay your bill, you should contact them to discuss your options. An agent will be happy to talk to you about your payment options so that you can decide which course of action is best.
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