It’s tax refund time! Do you have a plan for what you are doing with your tax refund this year? Depending on how large your refund was, many options might be available to you. A few conservative options may be to put it in savings, pay off a credit card, make an extra payment on your mortgage or car. You could also treat yourself.
Perhaps you could use your tax refund to go on that trip you’ve been putting off for years, or to purchase that perfect grill you’ve had your eye on for a while (just in time for summer) or maybe to expand your wardrobe. Or maybe all of the above? You could put half in savings and use the other half for splurging on yourself or your family.
Wait, I Have to Pay?
Unfortunately, not everyone will receive a tax refund every year, and many are left with a tax debt and must pay money rather than receiving a nice refund. There are many tax debt solutions available.
It is extremely important that you make payment arrangements as soon as possible with the IRS. A failure-to-pay penalty will accrue ½ of 1% of your unpaid taxes each month until you make arrangements for payment. There are quite a few different tax debt solutions that you may qualify for, including arranging a payment plan with the IRS. This debt solution will allow you to make smaller payments until your debt has been repaid.
Is There Another Way?
Another tax debt solution would be an Offer in Compromise: the IRS allows you to pay a reduced amount to cover your total amount owed. You may also qualify for a First Time Penalty Abatement: available to taxpayers in good standing for the previous 3 years. If you have filed and not owed a penalty for 3 years, this option may be available to you.
There is no need to panic if you owe taxes. With so many different tax debt solutions available, it is best to consult a tax professional to help you. The consultants at Nationwide Tax Solutions are here to help. We’ll assist you in figuring out your best option to ease the stress and confusion that can arise from dealing with your tax debt.