April 15th is history and you didn’t file your tax return or an extension. Why? Because you owe Uncle Sam money, and your checking account is running on empty.
Unfortunately, avoiding the issue won’t make it go away. Interest and penalties begin accruing from the due date of your return. Here are better options.
- File right away and pay what you can. The IRS will send you a bill for the balance, usually within a month. Late payment penalties and interest still apply, but the sooner you pay, the less they’ll be.
- Charge it. Instead of paying penalties and interest to the IRS, you’ll pay a convenience fee to your credit card provider, along with interest on any balance you carry over.
- Borrow from the IRS. You can “borrow” from the IRS for up to 120 days for no fee, or request a longer term monthly installment plan, either on paper or on-line. The fee for an installment plan varies depending on your income level and whether or not you have the payment debited from your checking account.
- Borrow from others. Friends, family, or your local bank or credit union may offer better interest rates on short-term loans than the IRS.
- Make an offer. Think you’ll never be able to pay what you owe? You may be eligible for an Offer in Compromise. An OIC is an agreement between you and the IRS that may result in an adjustment or let you pay less than the full amount owed. Look for Form 656-B.