What to Do When You Didn't Pay Taxes

When you didn't pay taxes, it's easy to get overwhelmed by the amount you owe. You might have a hard time deciding how to handle the situation, and you may even start to feel guilty or anxious about it. But don't let your fear of what you're going to do keep you from working with the IRS to get your finances in order.

The Repercussions of Not Paying Taxes

The repercussions of not paying your taxes can be quite severe, though they vary depending on your particular situation. In general, not paying your taxes will result in a failure-to-file penalty and interest charges, which you'll eventually have to pay.

You'll also have to face additional penalties for filing your taxes late and not submitting all the required documents. These can be even worse, as the IRS can levy your bank accounts, garnish your wages and take away your passport.

Thankfully, there are some preventative measures you can take to avoid the problem altogether.

1. File Early

If you're able to file your taxes by the deadline, you'll have more time to come up with the money to pay what you owe. In addition, you'll only have to pay a failure-to-file penalty on the first month you fail to file your taxes.

2. Pay What You Can

If your income isn't enough to cover the taxes you owe, consider making partial payments until you can pay the full amount. This will not only make you look more responsible, but it will also help you save on interest and penalties that accrue over time if you don't pay the entire amount in one go.

3. Set Up a Payment Plan

If the problem isn't too serious, you might be able to work with the IRS to set up a payment plan that will allow you to make regular payments toward your debt. These payments will carry a lower failure-to-pay penalty and interest rate than if you don't pay your debt, but you'll still need to pay the amount in full before the IRS agrees to your plan.

4. Contact the IRS immediately to resolve your problem

If you don't pay your taxes, the government will begin to try to collect them. The agency will then use several tools to collect the money owed, including federal tax liens, levies and wage garnishments.

5. Contact a Tax Professional

If your problem is severe, you'll need to hire a tax professional to help you resolve your debt. A tax professional can review your situation, identify the most favorable options for you and recommend ways to minimize your financial burden.

6. Avoid the Repercussions of Not Paying Your Taxes

The most common mistake people make when they aren't able to pay their taxes is to simply ignore the issue. This can lead to a spiraling problem that can cause you a lot of stress and worry in the future.

You can help prevent these problems by taking the time to file your taxes on time, even if you're financially struggling. This can be a very difficult task, so it's best to enlist the help of an experienced professional.

When was the last time you sat down in one room with your tax professional, investment advisor, and insurance agent to talk about you, your goals, and your money? At East Coast Tax and Financial, we strive to meet our clients where they are at by strategically analyzing all aspects of their financial situation. We create unique processes and implement strategies that fit their individual needs and goals. The result is a holistic approach to aligning their tax and financial needs with their long-term future. Our team takes pride in creating strategies that work seamlessly into their lives and educating them on how to implement those strategies.