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Every Saturday, we open the mailbag, pour some strong coffee, and tackle the tax questions keeping America awake at 2 a.m. Here’s this week’s question:
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I’m going to owe this year and I don’t have the cash. What are my actual options before the deadline hits?
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First, let’s clear up the biggest myth: filing for an extension does NOT extend your time to pay. April 15 is still your payment deadline, even if you push your paperwork to October.
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If you can’t pay in full by Tax Day, you have three realistic options, and none of them involve hiding under your desk until the IRS forgets about you.
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Option 1: Pay What You Can
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File your return on time and pay as much as possible. Even $50 helps. Why? Because the failure-to-pay penalty is 0.5 percent per month on the unpaid balance. Cutting that balance down by anything reduces what you’ll owe in penalties and interest later.
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Option 2: Set Up an Installment Agreement
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Did you know the IRS offers payment plans? Monthly payments make the pain more manageable, and as a bonus, the failure-to-pay penalty drops from 0.5% to 0.25% per month once you’re on a plan.
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Option 3: Request a Short-Term Payment Extension
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If you can pay within 180 days, the IRS offers a short-term extension with no setup fee. You’ll still owe interest and penalties, but you buy yourself time without jumping through hoops.
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Do not ignore it. The failure-to-file penalty is 10 times worse than the failure-to-pay penalty. File your return even if you’re sending in $0. At least you’ve limited the damage to one penalty instead of stacking them both.
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The IRS isn’t warm and fuzzy, but they’d rather work with you than chase you. Set up a plan, pay what you can, and keep the penalties from snowballing into something ugly.
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PRESENTED BY TAXQUOTES
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If you’ve done your taxes, seen the number you owe, and immediately considered faking your own death … breathe. Not being able to pay by Tax Day is more common than you think, and there are actual, legitimate options available to you.
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Whether it’s setting up a payment plan, getting penalties waived, or even reducing your balance, TaxQuotes can help you take care of your tax bill (no fake funeral required). Click here for a free consultation.
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