If you fail to pay the tax on time you face penalties. These penalties keep on increasing and add to your debt. It is better that instead of running away from taxes you file your tax return. In order to reduce the hit to your wallet from penalties, be sure to file your return even if you’re going to owe.
If you are thinking, “I can’t pay my taxes in full,” there are few options available for you to avoid tax penalty:
Pay through your credit card
If you don’t have the money at a time when you file tax returns it is better that you pay from credit card rather than not paying at all. Although credit card is another form of debt, but if you are sure that your money will arrive in a few days. Then you can easily pay the credit card bill later. Credit card payment gives you time advantage. The IRS accepts all major credit cards (American Express, Discover, MasterCard, or Visa). The IRS doesn’t charge a fee for credit card payments but the processing companies do: the amounts vary from 1.87% to 2.35% of your bill for credit card payments. It is advised that you pay as much as you can upfront since you are limited to two credit card payments for individual income tax payments.
Re-finance your home
If you have a equity at your home. You can pay off the previous debts by using your home as a mortgage. Mortgage rates remain relatively low and unlike credit card interest, you can deduct home mortgage interest on your income taxes if you itemize. In this way you convert the unusable assets into usable resources and minimize your tax debt.
My Tax help MD can help you clear your previous debts and avoid tax penalty by going through your case in detail and providing the best solution possible.