As if it isn’t bad enough that you have to pay bills and taxes on some of those bills, you also have to pay taxes every time you go to the store. You might even have to pay out of pocket for the money you make through the year. There are plenty of ways to get credit on your taxes if you meet certain income guidelines, are head of household, or have dependents who rely on you for their support. You can even take deductions for energy efficient home improvements and interest paid on certain loans. And yet, you still might not have enough deductions to avoid having to pay in taxes at the end of the year. Below are some ways you can deal with this debt.
Get an Extension
Did you do your taxes yourself or did you have a professional prepare them? You may need to request an extension so that you can have a professional go over your taxes with you. This is especially true if you are a small business owner and aren’t really sure what you can and can’t claim. Filing for an extension doesn’t relieve you of your tax burden. It just gives you more time to find someone who can help you see if you even have a tax debt and make sure you haven’t overlooked any important deductions or credits that may help.
Pay it Off
If possible, pay the taxes as soon as your return is accepted. Then, start preparing for the next year by setting up quarterly payments. If your tax burden is a small one, you can simply pay it every year. If it is too much for you to pay at once, then it’s time to start setting money aside throughout the year so you can avoid owing when you file next year. If you are in a situation where you are also dealing with credit card debt and late payments on mortgages or other loans, it might be time to consult a bankruptcy lawyer. You don’t want to wait until you are so far in debt, you can barely cover basic living expenses.
Make Payment Arrangements
The Internal Revenue Service (IRS) does take payments on taxes owed and is usually willing to work out an agreement according to your income and expenses. You can set up a payment arrangement for the current debt, but you should also start planning for the next year. This may mean that current year costs you twice as much, but it also means you will be prepared in the future. It’s also a good idea to start looking for ways to reduce your tax burden through interest payments, donations, and other deductions.
Even after making preparations and arrangements, tax burdens can become too much to handle, especially when you’re juggling other expenses. If you owe a large tax debt and can’t seem to get it taken care of with your other debts, make sure you consult a bankruptcy lawyer for help.
Are you getting a refund or will you owe this year? Let us know in the comments and be sure to share this post with people you know online.