Tax season can be quite a headache. Even if you’re expecting a refund, the whole process can be a bit overwhelming sometimes. And of course, there’s added stress if you know the results are going to reveal that you owe the government money. If you find out you owe more than you’re able to pay by your filing due date, it will complicate things even further. If you’re feeling this kind of stress of right now, here are some steps to take…
File anyway: If you can’t pay the tax you owe in full, the balance will be subject to interest and a monthly late payment penalty. But if you don’t file, you’ll be subject to a penalty, so file anyway and then try to pay as much as you can so you’re not bombarded with interest and penalties.
Seek more time: One option if you’re unable to pay your tax bill in full by the due date, is to ask for more time. If you’re anticipating being able to pay in full within a few months of the due date, you may qualify for additional time – up to 180 days – to pay in full. There’s no fee for a full payment.
Apply for a payment plan: If additional time isn’t going to be enough for your situation, you can apply for a short-term payment plan (180 days or less) several different ways. You can apply by phone, mail, or in-person ($0 setup fee) or by using the Online Payment Agreement (OPA) application (also $0 setup fee but the online application is for individuals only and currently limited to 120 days). There are also long-term payment plans, but setup fees are more expensive and they’ll feel more like a loan without the new car to go with it, so avoid this option if possible.
However you choose to go about paying your taxes, you will be subject to penalties and interest until your balance is paid in full, so keep that in mind.