How to Pay Taxes When You're Broke

Опубликовал Admin
25-09-2016, 16:05
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If you cannot pay your federal income taxes, which are due when you file your tax return, your options will depend on the amount you owe and your financial situation. If your taxes due to the Internal Revenue Service (IRS) are $10,000 or less, and you can't pay within 120 days, you can request an installment agreement. If the amount owned is greater than $10,000, a better option is to file an offer in compromise. Here's how to pursue either option to pay taxes when broke.

Requesting an Installment Agreement

  1. Expect approval of your installment agreement request if you meet certain criteria.
    • The amount of tax you owe is $10,000 or less.
    • During the last 5 years, you promptly filed your tax returns and paid taxes due.
    • The IRS determines you can't pay the taxes based on the documentation you provide.
    • You commit to paying the full tax due within 36 months and comply with all tax laws during this period.
  2. Access Form 9465, Installment Agreement Request, from the IRS website.
  3. Complete Form 9465 and attach it to your tax return.
  4. Mail it to the IRS Service Center shown in your tax return booklet, preferably by March 31.
  5. Wait to hear a response from the IRS within 30 days. (If you mail the tax return after March 31, the response time could be longer.) Whether it's approved or denied, you'll receive a response either way.
  6. Review the response from the IRS. If it's approved, the response will detail the terms of the agreement, along with a fee request to implement the agreement. Penalties and interest charges for late payment will continue to accrue until the tax is paid in full.

Filing an Offer in Compromise

  1. Complete Form 656, Offer in Compromise, if you want to settle the amount of tax due for a lesser amount. This is only an option when the tax liability is greater than $10,000 and you cannot pay it.
    • In Section 1, provide the necessary personal information.
    • In Section 2, indicate the type of tax and tax years involved in the offer.
    • In Section3, give details and explanations of the circumstances which resulted in the offer.
    • Complete Section 4 if you qualify for low-income considerations.
    • In Section 5, enter the amount of the offer and pick a payment option.
  2. Fill out Form 433-A or 433-B, depending on whether you are an individual or business entity. These forms are used to calculate an appropriate offer, based on assets, income, expenses and future earning potential.
  3. Submit both forms to the appropriate processing office for your state. Include the required $150 application fee and initial payment, unless you qualify for low-income certification.

Tips

  • If you can get a loan from a financial institution to pay the tax when due, thereby avoiding penalties and interested charges by the IRS, this is usually a better route than making an installment agreement request or offer in compromise.

Warnings

  • If you are in bankruptcy, any resolution of tax liability will occur within the context of the bankruptcy proceeding and you do not need to use these methods to pay taxes.
  • An installment agreement can be terminated if the IRS learns that you provided incomplete or inaccurate information on Form 9465.
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