How Will I Pay My Taxes

It’s tax season again. Many people dread tax season. I dread having to gather all of my receipts and enter the information in the automated tax software I purchased. However, I must admit it is much easier than having to fill out paper forms. This year the deadline for filing your taxes is April 17, 2012. Tax season is even better if you don’t owe taxes. However, if you owe taxes there are several options available.

To make sure you are not violating any tax laws consult a tax lawyer, CPA or certified tax accountant to review your taxes and supporting documentation to make sure that the amount of taxes you owe is correct. Here are 10 ways to pay your taxes.

1. You can setup an installment agreement and pay the amount owed in 3 years.
2. Request an extension and request the maximum extension time of 6 months.
3. Pay by credit card. Pay by credit card if you don’t have the money when the bill is due.
4. Bank Loan. Apply for a bank loan to cover the entire amount of taxes owed. The interest rate is much cheaper than setting up a payment plan with the IRS or a state taxing authority.
5. Use savings. Using savings accounts, savings bonds, stocks, etc. to pay the taxes.
6. Life Insurance. Take out a loan from your life insurance policy to pay the taxes.
7. Borrow. Borrow money from family or friends.
8. Earn extra money. Consider getting a part-time job or work overtime at your existing job to earn money to pay back your taxes.
9. Request an Offer in Compromise. An offer in compromise allows you to settle your for less than the full amount in you meet certain requirements.
10. If you owe taxes from a previous year get caught up on all back taxes first then address any taxes owed for the current year.

The IRS has ten years to collect on back taxes so it is best to work with them to setup a payment plan to back the amount owed. For more information visit the IRS website at irs.gov.

Help for Delinquent Tax Payers

If you are delinquent on your IRS tax bill now there is help. The IRS is trying to help taxpayers who are delinquent on their tax bills. They are reducing the number of property tax liens and loosening the rules for small businesses to allow small businesses to setup installment agreements to pay back taxes. Tax liens are notices that are filed on land to ensure the government will collect back taxes when a property is sold, i.e. real estate, boat, etc.

The new IRS guidelines increases the amount of taxes owed before a lien is placed. Liens are automatically placed when the limit is reached. If you owe $10,000 or more a lien is placed on your property, previously the minimum amount was $5,000. If you meet certain income or debt requirements you can settle your debt for less than the original amount owed.

Small businesses that owe up to $25,000 will now be eligible to setup 24 month payment plans. This is great for small businesses that are not struggling financially but for small businesses that are still recovering from the recession, this will cause many to go out of business. This may cause another recession for small businesses which greatly contribute to the health of the economy and provide jobs for millions of Americans.

Once a tax lien is placed on your property it remains on your credit report for 7 years from the date the lien is paid. Unpaid tax liens can remain on your credit report for up to 15 years. Tax liens also lower your credit score and are considered public records which may affect your employment and the ability to get hired for a job.