How to Pay Taxes When You're Broke

Is Uncle Sam knocking at your door? If you have taxes to pay and no means to do so, try coming up with a workable plan to get your taxes paid or excused.

Difficulty: Challenging

Instructions

Things You'll Need:

• IRS Forms
• Postage Stamps
• Tax Consultants
• Envelopes

1. Determine if you need more time to pay taxes, if you need to pay in installments, or if you cannot pay at all.

2. File tax returns on time, even if you don't have money to pay. You will be penalized 5 percent a month for late tax returns, and 0.5 percent a month for not paying on time.

3. Fill out an extension form (Form 4868) by April 15 (April 17 in 2000) if you need more time. The IRS will give you an automatic extension until August 15.

4. Estimate the amount you expect to owe and pay whatever you can.

5. File Form 2688 by August 15 if you still need more time. The IRS may grant you an additional two-month extension.

6. File an Installment Agreement Request (Form 9465) if you don't have enough money to pay your taxes. Indicate how much you can afford each month and when you will pay.

7. Prepare an Offer in Compromise if you know you'll never be able to pay off your large tax bill. Offer to pay a lesser amount to settle the bill immediately.

Tips & Warnings

• Consult with a tax professional to learn more about requirements for an Offer in Compromise.
• Consult with an attorney or accountant if you are unclear about how to proceed, or if a lot of money is at stake.

[vernk]

on 7/2/2009 i second the leniency of the irs. they do tend to work with you. your house just isn't worth as much as your dollar!

[capx197]

on 6/29/2009
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[offgrid]

on 12/20/2008 Good information.

on 9/4/2006 You can discharge IRS and state taxes if they meet three criteria.
1- They must be 3 yrs old from the date they were originally due.

2- If the tax was filed late, they must be 2 yrs old from the date of the late filing(the date of filing is the date the IRS receives your return or you sign off on the substitute tax return (SOR) they sent you and you agreed to accept as your return for that year by signing and returning it to the IRS. The day the SOR is received by the IRS, it becomes the filing date. Make sure you send all tax returns with post office return receipt.

3- The taxes for that particular year must be assessed for a total of 240 days.The date of assessment is the day that the IRS prints on you tax record the amount of money they figured that you owe in taxes due plus penalties. This date is printed on the your IRS record that you can get a copy of by contacting the IRS. If you filed an offer in compromise (OIC), the 240 day assessment window is extended from the time the IRS receives your OIC to the the date of rejection or withdrawal of the OIC. Additionally, because you filed and OIC you will automatically have another 30 day added to the 240 day assessment total. The addition of extra days, by stopping the clock because you have submitted an OIC also known as tolling and can be critical to your bankruptcy results. I highly suggest that you discuss this topic with a tax accountant who has dealt with complicated bankruptcies.

on 12/15/2005 Deal with it. The stress of avoidance and denial take a huge toll, and the end result is usually never as bad as you think it is. The IRS doesn't really want your house, your car and your first born, they just want their money! They are actually pretty reasonable, and are very willing to make arrangements, but you have to live up to your agreement. Make that call!