Tax deadline day: What to do if you can't pay your bill
Because of the COVID-19 pandemic, the IRS extended the tax filing deadline to Monday, May 17. But even with the extra time, it's still a stretch for many families to pay their tax bill.
There are some options to help you pay, or delay.
Even if you can't afford to pay your taxes, it's still best to file a return no matter what.
"Pretty much it's guaranteed the IRS will find you," debt relief attorney Leslie Tayne said. "You can run, but you can't hide."
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She says clients who've ignored tax bills have paid the price.
"You could get a letter stating that you owe interest and penalties that could make a small amount you originally you owed double or triple," she said. "You can find you have a license that's going to be suspended, and that could include passports."
Account and assets could face a lien or be frozen, and Tayne suggests filing for an extension if you're unable to pay or can't get your taxes together by the deadline.
There is a form needed to request an extension, and a fee to apply.
"The IRS s definitely behind, so if taxes are due May 17, that doesn't mean five, 10 days later you are getting a bill," she said, "It's important to be proactive."
You can request a payment plan or negotiate an offer in compromise.
"Which is basically a way to negotiate what your balance owed to the IRS," Tayne said "It's almost like debt settlement. The offer in compromise also comes with a fee. There are two options, a lump sum and and pay over time."
But note that many of those requests are rejected
Tayne strongly recommends having a tax professional help you apply so the offer is accurate, timely, and in your budget.
"You definitely don't want to default on payments to the IRS," she said. "You could find that you'll get sued."
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The big takeaway is to watch out for scammers who offer tax help, as there's a real fear they may take your money and run.
And if you're looking at withdrawing from your 401(k) or using a credit card to pay your taxes, just be aware there are penalties and fees and interest to consider.
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