Many Americans dread tax season. This could be due to the necessity of gathering and organizing documents. And those who are self-employed may especially hesitate to file taxes if they anticipate that doing so may incur further debt. However, for those who owe taxes over and above what they can pay in one lump sum, there are repayment options available.
Consider your tax repayment options
That debt can be overwhelming is no surprise for most Americans. With the new tax laws, many people may expect to see lower returns overall. And homeowners in New York may anticipate increases in taxes this year.
However, when taxes are due, it is good to remember that the Internal Revenue Service (IRS) provides various options for making payments by accepting cash, direct pay, electronic funds transfer and credit cards.
Repayment options include:
- Taking out a loan. It may seem counterintuitive to borrow money to pay a debt. However, in some instances, a personal loan could provide a more affordable repayment option with a lower interest rate. A lump sum payment can help taxpayers avoid additional penalties.
- Offer in compromise. In some cases, a debt settlement option may be available. Depending on the circumstances, the IRS might accept a repayment offer less than the amount owed.
- Payment arrangement. For tax debts less than $50,000, an installment agreement might allow monthly payments to be made over the course of a period of time - up to 72 months.
Although it is hard to accept further debt, these options can allow for reduced stress around tax time. And as repayment options are explored, it may also be good to look at things that can be done to prevent similar situations in the years to come.