What Should You Do if You Cant Pay Your Taxes 2021
Don’t panic! Here are some ideas for getting your tax bill paid and minimizing interest and penalties.
File your tax return on time. Individual income taxes are due and payable in full on April 15. If you expect to owe, you may be tempted to postpone filing until you have the money or decide not to file the return at all.
- If you can’t file your personal tax return by April 15, you can apply for an automatic six-month extension of time to file. Tax returns filed after April 15 are subject to the late filing penalty if no extension is in place.
- The automatic six-month extension is obtained by filing Form 4868. This is only an extension of time to file, not of time to pay.
- Be sure to file the return before the extension expires. Missing the tax return due date (including extensions) makes you subject to the late filing penalty, which can be as much as 25% of the amount of tax due.
- To avoid the late payment penalty, pay at least 90% of your tax liability by April 15 and pay in full by the extension date of October 15. Otherwise, the late payment penalty can also be as much as 25% of the amount due.
Pay as much as you can with your tax return. Even if you can’t pay the entire amount, pay as much as possible when you file your tax return.
- Every dollar you pay reduces the late payment penalty and cuts down on interest charges.
- The same principle holds if you owe because of an audit or IRS notice. Pay as much as you can as early as you can.