(608) 221-2332

I Can’t Afford My Tax Bill, What Now?

When tax time rolls around, you may be wondering, “what happens if I can’t afford my tax bill?” Perhaps you file on time but know you won’t be able to pay your bill in full. Or, maybe you weren’t expecting a tax bill at all and don’t have enough money saved to pay. If you can’t afford your tax bill, don’t panic. More than half of millennials don’t have $500 set aside for a tax bill, so you’re not alone. There’s a handful of options available to help you. The most important thing you can do if you can’t afford your bill is to be proactive. Avoid waiting for the IRS to call, as the penalties and limitations may be much harsher. The IRS may be more likely to accommodate if you create a record of honest, dedicated communication. How do I pay my tax bill off? The due date for paying your 2019 taxes is the due date of your return, April 15, 2020. Even if you file for an extension, the IRS expects you to estimate the amount of tax due and pay your tax bill by April 15. If you file on time but do not pay timely, the IRS will charge you interest, currently a 5% annual rate (subject to change each quarter) on unpaid tax bills. In addition, you may be charged a 0.5% per month “failure to pay tax” penalty (maximum of 25%). If you plan to pay the amount due in a few months, plan to file your return by the due date, figure out what you can afford to pay monthly...