You have filed your taxes and now you’re left with an outstanding balance due. What do you do next? In this episode, we discuss what your tax payment options are and what can happen if you don’t make a plan and start paying.
Your first and foremost option is to pay the balance. When you don’t pay the balance upfront you accrue interest and penalties, making your tax bill even larger. Sometimes this isn’t an option for small business owners, so what next?
Create an informal arrangement. This is where you make a plan to pay what you can over the next several months. You pay what you are able to right away and then make payments under no official agreement to the IRS as you can make them. This could be biweekly or monthly, but the time in between payments should not exceed more than a month. This option is best suited for businesses that can pay these taxes in just a few months, and should not be made if payments exceed a year.
If you haven't made any payments and you begin to receive notices from the IRS, it is time to make an arrangement. If you owe 50,000 or less, you can create an installment plan through the “Streamlined Process” IRS.GOV website. When you agree to this arrangement you agree to stay current on all following tax years which means you must create a plan to not create a balance for the next tax season. If you owe more than 50,000 the best option is to pay it down to that point, otherwise a more extensive report of financials is required.
In some cases, businesses may owe taxes to the IRS, the State, and their local government. Every state and entity has different rules, penalties, and arrangement options available. The best step is to determine which entity has the most strict policies and the least lenient payment plans and pay that entity first. Then move forward with the installment plan or other options provided by the other entities.
No one likes paying taxes but you must stay on top of this. Not paying your outstanding tax balance can lead to liens on your property or bank accounts, garnishment of wages, and seizing of assets. Put your best foot forward by making a plan right away for your tax repayment, keep in contact with your professional, and if you are handling it yourself keep in contact with the IRS or other government agency.
Keep listening for more important tips, advice, and ideas for business owners.
What’s Inside:
Mentioned In This Episode:
Internal Revenue Service
You have filed your taxes and now you’re left with an outstanding balance due. What do you do next? In this episode, we discuss what your tax payment options are and what can happen if you don’t make a plan and start paying.
Your first and foremost option is to pay the balance. When you don’t pay the balance upfront you accrue interest and penalties, making your tax bill even larger. Sometimes this isn’t an option for small business owners, so what next?
Create an informal arrangement. This is where you make a plan to pay what you can over the next several months. You pay what you are able to right away and then make payments under no official agreement to the IRS as you can make them. This could be biweekly or monthly, but the time in between payments should not exceed more than a month. This option is best suited for businesses that can pay these taxes in just a few months, and should not be made if payments exceed a year.
If you haven't made any payments and you begin to receive notices from the IRS, it is time to make an arrangement. If you owe 50,000 or less, you can create an installment plan through the “Streamlined Process” IRS.GOV website. When you agree to this arrangement you agree to stay current on all following tax years which means you must create a plan to not create a balance for the next tax season. If you owe more than 50,000 the best option is to pay it down to that point, otherwise a more extensive report of financials is required.
In some cases, businesses may owe taxes to the IRS, the State, and their local government. Every state and entity has different rules, penalties, and arrangement options available. The best step is to determine which entity has the most strict policies and the least lenient payment plans and pay that entity first. Then move forward with the installment plan or other options provided by the other entities.
No one likes paying taxes but you must stay on top of this. Not paying your outstanding tax balance can lead to liens on your property or bank accounts, garnishment of wages, and seizing of assets. Put your best foot forward by making a plan right away for your tax repayment, keep in contact with your professional, and if you are handling it yourself keep in contact with the IRS or other government agency.
Keep listening for more important tips, advice, and ideas for business owners.
What’s Inside:
Mentioned In This Episode:
Internal Revenue Service