Phil's Financial Tip of the Day:
What if you can't pay your taxes?
By Amy Feldman
NEW YORK |
(Reuters) - It's one of the worst tax time scenarios: You discover while doing your taxes — or you just know without even doing them —that you owe taxes, and you don't have the cash. What should you do?
You may be tempted to ignore the problem. Don't do it. The worst thing you can do is put off filing your return because you're afraid of the bill. The Internal Revenue Service (IRS) penalties for not filing are more punitive than the ones for not paying.
The failure-to-file penalty runs to 5.0 percent a month that your return is late, up to 25 percent, with a minimum penalty of $135. The failure-to-pay penalty is just a fraction of that, at 0.5 percent a month of the unpaid tax at April 17, and even that is cut in half for taxpayers who set up a formal installment plan with the IRS. Either way, you'll also owe interest, currently at a modest 3.0 percent a year.
To read the entire article from Reuters:
http://www.reuters.com/article/2012/04/10/us-column-yourmoney-taxes-feldman-idUSBRE8390P120120410
If you are not willing to risk the unusual, you will have to settle for the ordinary. — Jim Rohn
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