Income Tax
Taxes will always be a significant part of our financial oblications even if you are in a low federal income tax bracket consider all the other taxes you pay:
- State and Local Income taxes
- Social Security Taxes
- Medicare Taxes
- School District Taxes
- County Taxes
- Gasoline and other Fuel Taxes
- Road Usage Taxes and Tolls
- Telephone and Information Usage Taxes
- Vehicle licenses
- Cigarette and Alchol Tax
These taxes and dozen of other taxes and fees can consume up to half of your income; so it's not really a suprise when occasionally people have trouble paying taxes. This can be particularly true if financial trouble starts then April 15th comes around and money is just not available to make federal income tax payments. Here are some steps to take:
- File your return on time, even if you can't pay. This will limit your liability for penalties and will prevent any appearance of tax evasion.
- Request an extension of time to pay. In some cases, the IRS will grant up to 60 extra days to pay the full amount due.
- Request an installment agreement. Approval by the IRS is automatic if:
- Your tax liability, including interest and penalties, is $10,000 or less;
- You can pay the amount due in three years or less
- You have no other installment agreements in effect with the IRS;
- You have not had an installment agreement within the past five years;
- Your returns have been filed on time.
- Consider filing an Offer In Compromise (OIC), which essentially is an offer to settle with the IRS for an amount less than the amount owed.
If have more than $10,000 in taxes you cannot pay an OIC could be a possibility for you.