What to Do If You Can’t Pay Taxes Next Week
It’s official: taxes are due next week. Back in March, the government pushed the application deadline back to July 15, and the Treasury Department recently confirmed it would no longer postpone it. If you’ve been putting off everything, now is the time to file your tax return and pay what you owe.
This is also the deadline for your tax payments in the second quarter, which was postponed due to the pandemic. However, your state may have different due dates for quarterly tax payments. You can check your state’s tax agency website through theFederation of Tax Administrators .
To learn more about personal finance, watch the video below:
As a reminder, we have a list of websites where both federal and state taxes can be filed for free . You may be eligible to file your tax return for free if you earned $ 69,000 or less in 2019.
If you need more time to file your documents, you can use Form 4868 to request an extension for filing your tax return. This will give you a deadline until October 15th, but you will not be exempt from paying taxes. The form asks for an approximate amount of your debt, as well as the amount you can pay now.
What happens if you can’t pay? Well, you may have more options than you expect. According to the IRS, most taxpayers are eligible for the following options.
- Online Payments Agreement – If you owe $ 50,000 or less, you may be eligible to enter into an online payments agreement. Options can include full pay, pay in 120 days or less, or a long term payment plan. You can see the cost and fees here .
- Installment Agreement – Those who do not meet the requirements of the online payment agreement can apply for an Installment Agreement. You can apply by phone or mail by filling out Form 9465 . There may also be charges for this option.
- Temporary Deferral of Collection – If you cannot afford to pay, you can ask the IRS to postpone the collection process until your financial situation improves. You will still be charged penalties and interest.
- A compromise proposal – if you cannot pay off your tax debt, you may be able to pay less than you owe. You can see if you meet the criteria by using aproposal in the pre-selection for compromise .
Regardless of which option you choose, you shouldn’t ignore next week’s tax filing deadline. Otherwise, you will also have to pay a penalty of 5% of the total tax payable per month (maximum 25%). For comparison, the penalty for non-payment is much less, only 0.5% per month.