What to Do If You Can't Pay Your Taxes

The end of tax filing extensions is quickly approaching. What do you do if you can't pay the amounts you owe? You should still file your return by the due date and pay as much as you can. There are, however, additional steps that might help.

Credit Cards

You can charge your taxes on your American Express, MasterCard, Visa or Discover cards. If you go in this direction, you can use either of the following two sources:

Official Payments Corporation
1-800-2PAY-TAX (1-800-272-9829)
www.officialpayments.com

Link2Gov Corporation
1-888-PAY-1040 (1-888-729-1040)
www.pay1040.com

If a credit card is out of the question, you may be able to pay any remaining balance over time in monthly installments through an installment agreement. If you are completely wiped out and the future looks grim, you may also want to consider getting the tax amount reduced through the Offer in Compromise program.

To apply for an installment payment plan, fill out and attach Form 9465 to the front of your tax return. The IRS has streamlined the approval process if your total taxes (not counting interest, penalties or other additions) do not exceed $25,000 and can be paid off in five years or less. Be sure to show the amount of your proposed monthly payment and the date you wish to make your payment each month. Make absolutely sure you can make the payments.

The IRS charges a $43 fee for setting up an installment agreement. You will also be charged interest plus a late payment penalty on the unpaid taxes. The late payment penalty is usually one-half of one percent per month or part of a month of your unpaid tax. The penalty rate is reduced to one-quarter of one percent for any month an Installment Agreement is in effect if you filed your return by the due date (including extensions). The maximum failure to pay penalty is 25 percent of the tax paid late.

If you do not file your return by the due date (including extensions), you may have to pay a penalty for filing late. The penalty for failing to file and pay timely is usually five percent of the unpaid tax for each month or part of a month that your return is late. The maximum penalty for failure to file and pay on time is 25 percent of your unpaid tax.

In Closing

The IRS wants you in the system, even if you're broke. Whatever you do, file your tax return in a timely manner. Once filed, the IRS will work with you on payment issues. Don't get stressed. Keep in mind that millions of Americans have the same problem.

Richard Chapo is CEO of Business Tax Recovery - Obtaining tax refunds for small businesses for overpaid taxes. Discovery tax strategies and deductions in our tax articles section.

MORE RESOURCES:

Obama#39;s 95% Illusion - Wall Street Journal

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=Tct=us/0i-0fd=Rurl=http://www.thaindian.com/newsportal/india-news/obama-reveals-how-he-plans-to-deal-with-economic-meltdown_100106606.htmlcid=1256027098ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNGVi9CZw0BDDqSx3yuXraenXvPAQAimg src=http://news.google.com/news?imgefp=fN67KHz4S-gJimgurl=www.thaindian.com/newsportal/images/Barack%2520Obama-79305.jpg width=80 height=62 alt= border=1brfont size=-2Thaindian.com/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/0-0fd=Rurl=http://online.wsj.com/article/SB122385651698727257.html%3Fmod%3Dgooglenews_wsjcid=1256027098ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNE4Cd8netLZNH5M65fRaY0eCRSFjAObama#39;s 95% Illusion/abrfont size=-1font color=#6f6f6fWall Street Journalnbsp;-/font nobr9 hours ago/nobr/fontbrfont size=-1One of Barack Obama#39;s most potent campaign claims is that he#39;ll cut btaxes/b for no less than 95% of quot;working families.quot; He#39;s even promising to cut btaxes/b b.../b/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/0-1fd=Rurl=http://www.youtube.com/watch%3Fv%3D3ShDaWICNZ4cid=1256027098ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNFYa0aJKfwes2dY07fIfSo3B-sG4wVideo: VP Debate - Tax Policies: Why are your tax policies not .../a font size=-1 color=#6f6f6fnobrCSPAN/nobr/fontobject width=448 height=356param name=movie value=http://www.youtube.com/v/3ShDaWICNZ4/paramparam name=wmode value=transparent/paramembed src=http://www.youtube.com/v/3ShDaWICNZ4type=application/x-shockwave-flashwmode=transparentwidth=448height=356/embed/objectbr/fontfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/0-2fd=Rurl=http://www.forbes.com/opinions/2008/10/12/taxes-mccain-obama-oped-cx_kb_1013bowman.htmlcid=1256027098ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNHnoNdiOS552nm4_cqqgJBGqXByZATaxing Times/a font size=-1 color=#6f6f6fnobrForbes/nobr/font/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/0-3fd=Rurl=http://www.cbsnews.com/blogs/2008/10/12/politics/fromtheroad/entry4516350.shtmlcid=1256027098ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNFegRklDQ72AOmFavNFSXa7jxr1UwOhio Crowd Helps With Obama#39;s Debate Prep/a font size=-1 color=#6f6f6fnobrCBS News/nobr/font/fontbrfont size=-1 class=pa href=http://news.google.com/news/url?sa=Tct=us/0-4fd=Rurl=http://www.globegazette.com/articles/2008/10/13/news/state/doc48f2ce2941db7778700036.txtcid=1256027098ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNHIhTmeXQTLTfkvQidljZEYlX1XzAnobrMason City Globe Gazette/nobr/anbsp;- a href=http://news.google.com/news/url?sa=Tct=us/0-5fd=Rurl=http://www.nolanchart.com/article5191.htmlcid=1256027098ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNGwGfhhr1b-RvMatuHrzS6OlTJMlQnobrNolan Chart LLC/nobr/a/fontbr/font class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1256027098hl=ennobrall 479 news articles/nobr/a/font/div/font/td/tr/table

The Savings Game: Taxes inevitable when drawing from an annuity - Salt Lake Tribune

John McCain considering new economic proposals - Los Angeles Times

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=Tct=us/2i-0fd=Rurl=http://www.latimes.com/news/politics/la-na-campaign13-2008oct13,0,5228014.storycid=1257260348ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNFvD9Efv5YxMp6wyexKm9Q4Sv6l0Aimg src=http://news.google.com/news?imgefp=VcE7xNh_quQJimgurl=www.latimes.com/media/photo/2008-10/42870778.jpg width=80 height=45 alt= border=1brfont size=-2Los Angeles Times/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/2-0fd=Rurl=http://www.latimes.com/news/politics/la-na-campaign13-2008oct13,0,5228014.storycid=1257260348ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNFvD9Efv5YxMp6wyexKm9Q4Sv6l0AJohn McCain considering new economic proposals/abrfont size=-1font color=#6f6f6fLos Angeles Times,nbsp;CAnbsp;-/font nobr6 hours ago/nobr/fontbrfont size=-1Economists and market watchers, while thrilled with the idea of cutting btaxes/b on investment income, were generally in agreement Sunday that it would do b.../b/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/2-1fd=Rurl=http://www.ksby.com/Global/story.asp%3FS%3D9166553cid=1257260348ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNETx8ZBikMgPbvqpT-7-9qUneJTvgMcCain weighs proposal to cut btaxes/b on investments/a font size=-1 color=#6f6f6fnobrKSBY/nobr/font/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/2-2fd=Rurl=http://blogs.wsj.com/washwire/2008/10/12/sen-graham-touts-mccains-plans-for-the-economy/cid=1257260348ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNEQEzJoRqJBCVQJ9odI0sjDeDRtMASen. Graham Touts McCain’s Plans for the Economy/a font size=-1 color=#6f6f6fnobrWall Street Journal Blogs/nobr/font/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/2-3fd=Rurl=http://online.wsj.com/article/SB122385969780027561.html%3Fmod%3Dgooglenews_wsjcid=1257260348ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNGhFwYMCyRhjo4oNXn9-3TRzzDfdAAdviser Says McCain Has bTax/b Cuts in Mind/a font size=-1 color=#6f6f6fnobrWall Street Journal/nobr/font/fontbrfont class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1257260348hl=ennobrall 17 news articles/nobr/a/font/div/font/td/tr/table

• Time is right to raise taxes on gasoline, says author of ... - MLive.com

North Dakota county officials study uranium taxes - Jamestown Sun

Jesuits call for higher taxes on better-off - Irish Times

Property owners could save on taxes with Amendment 4 - TCPalm

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/6-0fd=Rurl=http://www.tcpalm.com/news/2008/oct/13/property-owners-could-save-taxes-amendment-4/cid=1256364902ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNHtwObQAkpDL9ucUR7rH2Le6wjl8QProperty owners could save on btaxes/b with Amendment 4/abrfont size=-1font color=#6f6f6fTCPalm,nbsp;FLnbsp;-/font nobr9 hours ago/nobr/fontbrfont size=-1By Monique Mattiace Amendment 4, Property bTax/b Exemption for Conservation Land, will be before Florida voters on the Nov. 4 ballot. b.../b/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/6-1fd=Rurl=http://www.heraldtribune.com/article/20081012/OPINION/810120332/-1/FRONTPAGE%3FTitle%3DAmendments_3__4_and_6__Yescid=1256364902ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNFjIdt5o2JYW-ybBZ8ytn34BRGe9wAmendments 3, 4 and 6: Yes/a font size=-1 color=#6f6f6fnobrSarasota Herald-Tribune/nobr/font/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/6-2fd=Rurl=http://www.tallahassee.com/article/20081012/NEWS01/810120336cid=1256364902ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNFH0R4wxWExltXWISFSV7tzVum2HAFlorida voters to decide on property-btax/b break for conservation land/a font size=-1 color=#6f6f6fnobrTallahassee.com/nobr/font/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/6-3fd=Rurl=http://www.tampabay.com/SearchForwardServlet.do%3FarticleId%3D846221cid=1256364902ei=W0nzSOX6Ip7M8ATC-sSPAQusg=AFQjCNEWnHgQKDrlSEQQKY8tAoCkzf4vtAOn the amendments/a font size=-1 color=#6f6f6fnobrTampabay.com/nobr/font/fontbrfont class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1256364902hl=ennobrall 10 news articles/nobr/a/font/div/font/td/tr/table

Italian council offers Mafia whistleblowers exemption from taxes - Telegraph.co.uk

Something stable in the economy: Oregon property taxes - The Oregonian - OregonLive.com

Incumbent Rabbitt, challenger Sommer differ on taxes - Times Herald-Record

Taxes - Google News

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