Financial Tip of the Day
While for many tax season will result in receiving a refund, many may find that they owe additional tax. I’ve been there. And while finding out that you need to pay even more in taxes than you expected can be quite stressful, distressing and frustrating, the one thing that you DO NOT want to do is “ignore” your tax bill.
It’s really easy to feel scared and overwhelmed when you feel financially stretched or don’t know where you’re going to find the money to pay it.
In my one-on-one work with clients, I often met with individuals who received notices of money owed and did nothing about it. That is the WORST thing you can do. Remember that saying, “Nothing is certain except death and taxes” (Benjamin Franklin)? Well, it’s basically true. It’s not worth it to try to run from a tax bill. It WILL catch you. Whether through levies, garnishments, or far worse…
So, let’s just skip ALL of that and go the peaceful route, okay? When filing your taxes this year, if this is your situation, just nip it in the bud by agreeing to pay your bill asap.
While filing your federal return, you can sign up for an installment plan if you can’t pay the full amount all at once: What Is the Minimum Monthly Payment for an IRS Installment Plan? I’ve done this before and it’s one of the most manageable and stress-free ways to pay it off. Plus, you can set up auto pay to deduct the money automatically to ensure that you take care of it. Most states also have tax payment installment plans too. Check with yours. Here’s more info about payment plans from the IRS website: IRS Tax Payment Installment Plans.
And don’t forget – you can always pay MORE than the amount you elect to pay each month. You can pay it off EARLY and be done with it.
That’s what I did. After setting up my installment plan, my income greatly increased the next year and I paid way more than my payment plan amount. I was able to pay my bill off in a few large lump payments. True financial peace of mind!