Tax season is upon us, and while some people will eagerly file their return early in anticipation of a tax refund, many others put off filing as long as possible. They could delay filing because they are natural procrastinators, but often the reason is because they owe money. Waiting a few months to file can help them build up more money for their tax bill.
Still, what happens if tax day rolls around and you don’t have enough money saved to pay your tax bill? You have a few options.
1. File an extension. This is generally not a good idea because fees will accumulate on the amount you owe. Only use this as a last resort if you don’t have all the information you need to actually file your taxes.
2. Borrow the money from friends or family. If you owe a few thousand dollars or less, you might see if you can borrow the money from family or friends. Of course, as a measure of good faith, you may want to sign a contract as a way to reassure your friend or relative that you do intend to pay them back completely. You will also want to set up a repayment schedule.
3. Take out a quick loan. If you will have the cash available in the next few weeks or months but after the deadline to file your taxes, you could take out an instant loan (more details are available here). These loans, otherwise known as Payday Loan, can give you money in an emergency. You will have to pay interest on the money you borrow, so you will want to pay this off as soon as possible. However, if you have a quick turn around and are able to repay quickly, this might be a better plan than dealing with the IRS and late payments and fees.
4. Take out a regular loan. If you need a larger amount of money, you could consider taking out a traditional loan or a peer to peer loan. A traditional loan will probably have lower interest rates, but they can be harder to obtain. A peer to peer loan may have higher interest rates, but they are easier to obtain.
5. Pay with your credit card. If you have the credit available, you may want to pay with your credit card. However, have a plan for how you will pay the balance off so you don’t pay high interest rates for years.
6. Make a payment plan with the IRS. As a last resort, you can make a payment plan with the IRS. This is usually a last resort because you will typically also need to pay fees and interest. And you certainly don’t want to fall behind with payments to the IRS.
If you have a high tax bill this year, don’t delay filing out of fear. Missing the filing deadline will only compound your problems. Instead, file on time and tap one of these other sources to make the payment. As a last resort, enter a payment plan with the IRS.