Most Americans dread tax time, and none more so than those who expect to have to pay the IRS this year. A lot of people assume that if they don’t file, they can just “catch up” next year, no harm, no foul—but that couldn’t be further from the truth. The IRS wants to get paid, so they’ve made the consequences of unpaid taxes in Jamestown, ND quite unpleasant. Ultimately, you’re better off filing and making arrangements to pay in installments rather than avoiding the matter altogether. Consequences of failing to pay your taxes include:
- You’ll still owe money: If only ignoring a problem made it go away—unfortunately, that’s not the case for most situations, and this is especially true when it comes to dealings with the IRS. Not only will you still owe the money when you do file, but you’ll also be hit with failure-to-file or failure-to-pay penalties—which can increase to up to 25 percent of your tax bill.
- Your credit will take a hit: If you owe more than $10,000, the IRS and your state can put liens on your property (usually your house, if you own one), which will affect your credit score as well as your ability to resell your house or other property—the government will take the money from the sale before you even see it. They can also levy your bank accounts and garnish your wages, revoke your passport and even your driver’s license.
- You’ll probably end up hiring a professional: The longer you wait to file, the more likely it is that you’ll need to hire a tax professional to sort out your mess—and those fees can add up, too.
What to do
If you’re dreading tax season because you’re having financial issues or are overwhelmed by the process, there are a few things you can do. First, if hiring a tax preparer is out of the budget, there is free tax software available online. Alternatively, many organizations will help you prepare your taxes for free, especially if you are elderly, disabled or make under a certain income threshold. (All of this being said, working with a professional is likely going to be the best way to get your situation resolved.)
If you’ve already filed but can’t pay your tax bill, don’t delay in contacting the IRS as soon as possible. They’re usually happy to work with taxpayers to create an installment plan, but your responsibility will be to make sure it’s a plan you can stick to.
Finally, you can always ask for an “offer in compromise,” which is when you submit a full financial report demonstrating your inability to pay taxes and a request to pay less than the full amount that’s due.
Craig S. Hanson, CPA is here to take the burden of tax time off your shoulders. Our team is experienced in handling tax and accounting services for individuals and businesses. We’ll help you maximize your refund and take the guesswork out of the complicated tax code. Don’t let the consequences of unpaid taxes in Jamestown, ND catch up with you—call us today for more information.