Apr 10, 2014: With Tax Day less than a fortnight away, you are either done with taxes or are hurrying to finish the formalities. But what if you don't have enough money to pay your taxes?The first step is not to panic. If you can’t pay your taxes immediately, you can consider a couple of alternatives:
1. Pay in installments
If you owe $25,000 or less in combined tax, penalties, and interest then you can use IRS's web-based Online Payment Agreement (OPA) or call the number on the bill or notice (have the bill or notice available, along with the social security number) to request a payment agreement. A fill-in Request for Installment Agreement, Form 9465, is available online that can be mailed to the address on the bill. An OPA application allows eligible taxpayers or their authorized representatives to self-qualify, apply for, and receive immediate notification of approval.
You may still qualify for an installment agreement when you owe more than $25,000 in combined tax, penalties, and interest. However in this case, a Collection Information Statement, Form 433F may need to be completed. You can call the number on the bill or mail the Request for Installment Agreement, Form 9465 and Form 433F to the address on the bill.
2. Request an extension of time to file
IRS has entitled you to an automatic six month filing extension for your taxes. To do so you have to file form 4868 by April 15th. This gives you a leeway till October 15th to file your taxes.
It is to be noted that an extension of time to file is not an extension of time to pay. You've got to pay any taxes you owe by April 15th; otherwise, the outstanding tax balance will accrue interest and possibly penalties, increasing the total amount owed. If you can't pay the full amount that you owe by April 15, you should pay as much as you can to minimize interest and penalty charges.
Here is a video from IRS.gov that provides some tips on what to do when you owe taxes but can't pay.
We hope that this information will help you in determining a last minute tax filing strategy. All the best!
Image Source(s): iStockPhoto
