Did You Meet the Tax Day Deadline?

Hopefully, everyone was able to get his or her tax payments in and filed by today. Because we realize situations arise that prevent people from making those payments and getting their taxes filed on time, we put together some tips to help you cope with tax debt and also get a head start on avoiding it in the future.

The first and most obvious way to avoid tax debt is to make your payments on time and file your taxes by April 15th. If that is not possible, you are permitted to request for an automatic 6-month extension. If you owe money on your tax return, understand that at least 90 percent of your balance is due by April 15th even if you haven’t filed your taxes.

If you receive an extension but see that you still can’t pay your dues by October 15th, you need to find a way to raise the money. You could try selling an investment or asset, taking a cash advance on a credit card, obtaining a bank loan, or even getting a loan from family and friends. Use discretion when asking family and friends for a loan. Those situations can sometimes be touchy, but other times, it serves as the perfect solution.

To better prepare you for next year, start by keeping adequate records of your income. Set up a calendar and mark important dates for reminders. This could ensure that you are making your payments on time.

Make sure your employer is withholding enough to cover your tax bill. If you want additional reassurance, personally set aside cash in liquid accounts. Remember that if you are making money outside of your job, you may also need to set aside more cash to cover that income.

You can arrange with the IRS to have an installment agreement and make your payments in monthly installments. The downside to this is that there are penalties and interest charges involved.

If you have any questions, the best source of information is the IRS. They have an intimidating reputation, but if you want to be sure you are doing your taxes correctly, they have the answers. Additional questions could be taken to an accountant, attorney, or tax professional.

April 15th has a very dreaded reputation, but the key to changing that stereotype is addressing any tax issue early on.