Finances Got You By The Throat? Here’s How You Can Reduce Your Tax Payments This Year
Tax day is due July 15th and not everyone is looking forward to it. In 2019, approximately 8 million people did not pay their taxes. On top of that, the stress as a result of the COVID-19 pandemic is putting the economic system into uncertainty- so much so, that in 2020, 37% of taxpayers said that they do not have the resources to pay this year’s taxes.
However, to aid taxpayers, the federal government did give an extra 90 days to close the payments this year since the original date was April 15th. But, what if you are still unable to pay them? Is there any hope for you?
We’re here to offer some guidance. The first thing to do is not panic. Instead, try to understand that many people from all walks of life face this situation in their lifetime. For those currently in the fold, there are various options available to help taxpayers out:
1. Monthly Installment plan
If you are behind payments but not by a considerable amount, opting for an installment plan might be your smartest move. What you need to do is file your return, log in to irs.gov and fill out the online payment agreement application.
For monthly installments, you can download Form 9465, which will give you 72 months to complete the payment. However, this is for payments equal to or less than $50,000, including interest, tax, and penalties.
Moreover, you need to be eligible for the program with previous tax returns filed first. Lastly, business owners and self-employed people with quarterly payments would have to make payments in the current year so they meet their deadlines.
2. Request an Offer to Clear Payments
This is option two for taxpayers who simply do not have the resources to pay back what they owe. It is really a gamble in which you make an offer to the IRS, and if it’s accepted, that’s the total you have to pay. In layman terms, it’s the IRS asking you how much you have on you and making a compromise. As a result, you don’t have to pay the full amount. However, some different terms and conditions need to be met for payments to be accepted.
For instance, the IRS will check your income, expenses, asset equity, and ability to pay to determine whether you’re really going all-in with the offer made. If yes, then they will most likely approve it. There are some risks involved in doing this. First, you have to pay 20% upfront and the rest in installments. If you fail to pay the installments, chances are the IRS might sue you for the original amount along with interest and penalties.
3. Partial Payments and Complete Paperwork
The most important thing you must do is to file your tax returns regardless of whether or not you have the payments. Filing could save you from a lot of trouble in the future. Secondly, if you are unable to pay in full, try to pay a small amount at least every month. What this does is at least prove your intent to pay even if it’s not in full. Plus, you get to save yourself from punishing penalties. Failure to file is worse than not paying the taxes.
More in Advisor
Thinking of Investing in Stocks? Keep These Tips in Mind for Sure-shot Success
The world is battling a pandemic, and nobody knows when it will end. But one thing is for sure; it has...August 7, 2020
As a Millennial, Stay away from these Investing Mistakes or You Might Feel Sorry When You Retire
COVID-19 has created a lot of damages and brought many changes, and these changes have affected almost all sectors, including retirement...July 30, 2020
Getting Ready to Plunge into Investments? Have a look at These Tips for some Cool Ideas
Investing in stocks isn’t easy; one needs to develop their knowledge and convert it into a realistic plan. It’s not about...July 29, 2020
Learn How to Secure Your Child’s Future With These Invaluable Insights
Becoming a parent is the most joyous experience of one’s life; however, with the arrival of a new family member, expenses...July 26, 2020
Are you familiar with these Loan Forgiveness Programs for Students?
Student loans make for a viable option to pay for your education, but often, repaying them can be a bit of...July 25, 2020
Lufthansa Airlines is Launching a New Leisure Unit under the name ‘Ocean’ – Here’s Everything You Need to Know
The airline industry is facing a major challenge during the past few months owing to the complete paralysis of movement, thanks...July 23, 2020
Cool Tips to avoid Letting your Income Subside During Coronavirus
There’s an astonishing number of people adversely impacted by Coronavirus all around the world. This stark reality is evident from the...July 22, 2020
The Most Favorable Things in Which You Can Invest In 2020
While the world was anticipating a financial and economic crisis similar to the one in 2008, it instead found itself facing...July 21, 2020
Looking to Secure Your Wealth During These Uncertain Times? These Low-Risk Investment Ideas Might Be Just What You Need
The year 2020 has presented the world economy with unprecedented challenges. Due to the coronavirus emergency and the worldwide reactions to...July 15, 2020