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Six Tips for People Who Owe Taxes

8/14/2014

 
While most people get a refund from the IRS when they file their taxes, some do not.  If you owe federal taxes, the IRS has several ways for you to pay. Here are six tips for people who owe taxes:

1. Pay your tax bill.  If you get a bill from the IRS, you’ll save money by paying it as soon as you can.  If you can’t pay it in full, you should pay as much as you can.  That will reduce the interest and penalties charged for late payment.  You should think about using a credit card or getting a loan to pay the amount you owe. 

2.  Use IRS Direct Pay.  The best way to pay your taxes is with the IRS Direct Pay tool.  It’s the safe, easy and free way to pay from your checking or savings account.  The tool walks you through five simple steps to pay your tax in one online session. Just click on the ‘Pay Your Tax Bill’ icon on the IRS home page.

3.  Get a short-term extension to pay.  You may qualify for extra time to pay your taxes if you can pay in full in 120 days or less.  You can apply online at IRS.gov.  If you received a bill from the IRS you can also call the phone number listed on it.  If you don’t have a bill, call 800-829-1040 for help.  There is usually no set-up fee for a short-term extension.

4.  Apply for a monthly payment plan.  If you owe $50,000 or less and need more time to pay, you can apply for an Online Payment Agreement on IRS.gov.  A direct debit payment plan is your best option.  This plan is the lower-cost, hassle-free way to pay. The set-up fee is less than other plans.  There are no reminders, no missed payments and no checks to write and mail.  You can also use Form 9465, Installment Agreement Request, to apply.  For more about payment plan options visit IRS.gov.

5.  Consider an Offer in Compromise.  An Offer in Compromise lets you settle your tax debt for less than the full amount that you owe.  An OIC may be an option if you can’t pay your tax in full.  It may also apply if full payment will cause a financial hardship.  You can use the OIC Pre-Qualifier tool to see if you qualify.  It will also tell you what a reasonable offer might be.

6.  Change your withholding or estimated tax.  You may be able to avoid owing the IRS in the future by having more taxes withheld from your pay. Do this by filing a new Form W-4, Employee’s Withholding Allowance Certificate, with your employer. The IRS Withholding Calculator on IRS.gov can help you fill out a new W-4.  If you have income that’s not subject to withholding you may need to make estimated tax payments. See Form 1040-ES, Estimated Tax for Individuals for more on this topic.

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  • Home
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      • Individuals >
        • Income >
          • Debt Forgiveness
          • Foreign Income
          • Gambling Income
          • Unemployment
          • Other Income
        • Deductions & Credits >
          • Adoption
          • Charitable Contributions
          • Earned Income Tax Credit
          • Educational Expenses
          • Energy Tax Credits
          • Employee Business Expenses
          • Other Deductions and Credits
        • Affordable Care Act - Individuals
        • Children and Dependents
        • Death
        • Disabled Taxpayers
        • Educators
        • Health Care
        • Identify Theft
        • Marriage and Divorce
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        • Who Must File
        • Other Topics
      • Businesses >
        • Affordable Care Act - Businesses
        • Year-end Reporting Obligations >
          • 1099's
          • Health Insurance Premiums
          • Depreciation
          • Reimbursed Employee Business Expenses
          • Company Automobiles
        • Employment Tax Credits
        • Independent Contractors
        • Tax Credits and Deductions for Businesses
        • Other Business Topics
        • Required Business Posters
      • Amended Returns
      • IRS Notices and Problems
      • Tax Plan >
        • All About the Earned Income Tax Credit
        • 5 IRS Audit Red Flags
        • Retirement Plans for Sole Proprietors
        • Are You Claiming All of Your Tax-Deductable Business Expenses for 2015?
        • All About Past Due Tax Returns
        • Do You Need to File Form 1099s?
        • How to File an Appeal with the IRS
        • Why You Might Get a Letter from the IRS, and What to Do
        • How to File an Amended Tax Return
        • Should You Claim the Home Office Deduction?
        • How to Avoid -- And Deal with -- Identify Theft
        • Q & A: IRS Audits
        • Are You Using the Right Business Structure?
        • Starting Planning for 2015 Income Taxes Now: 5 Tips
        • What You Need to Know About Estimated Taxes
        • Contractor or Employee? How the Income Tax Obligations Differ
        • The New Form 1095-A: Reporting Health Insurance Coverage
        • Are Your Social Security Payments Taxable?
        • Do You Qualify for the Earned Income Tax Credit?
        • Are You Eligible for Health Insurance Tax Credits
        • Employee Retirement Plans - Tax Advantages and Other Benefits
        • 5 Business Tax Credits You May Be Missing
        • New Business in 2012
        • Is it a Bad Debt or a Simple Revenue Loss? Telling the Difference
        • Business Taxes Add Complexity: How Will This Affect You?
      • Tax Scams