April 18, the day when taxes are due to be filed, is quickly approaching, and some people are dreading the day more than other taxpayers due to being unable to pay off this year's tax bill.
In the case that a taxpayer is unable to pay off his or her tax bill, ignoring the situation should not be considered an option. Nina Olson, the executive director of the nonprofit group Center for Taxpayer Rights, explained that late-payment penalties and interest on one's debt can build up, leading to the original debt increasing to much higher than what it would be if left unpaid, according to Next Avenue.
"The worst thing to do with the IRS is to do nothing at all," Olson said. "You really do need to take some steps if you have debt and can't afford to pay."
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Ask for help
Taxpayers dreading the incoming April 18 deadline have the option to call the Internal Revenue Service's 1040 toll-free line at (800) 829-1040. However, calling this number can lead to a long wait, so taxpayers can also find information that can help them on the IRS's website.
Lisa Greene-Lewis, a tax expert at TurboTax, recommends that taxpayers "prepare their taxes as soon as possible" so they know soon how much money they owe when filing taxes. If taxpayers owe a large amount of money, they can choose to pay what they owe with multiple payments over time rather than making a giant payment all at once.
Use an installment plan
Taxpayers also have the option to use an extended installment plan, which allows them up to six years to pay off their tax bill, though this can lead to building up interest. A short-term agreement is also an option, which will allow taxpayers to pay off their bills over 180 days, according to Greene-Lewis.
A taxpayer who cannot pay anything should ask to be considered "currently not collectible," Olson says. The designation does not let you totally off the hook, but it does alert the IRS that you do not have the ability to cover your basic living expenses and pay the tax bill at the same time.
Use an additional deduction
Taxpayers who are single and are either 65 years old or older or blind qualify for an additional $1,750 standard deduction.
Additionally, low-income taxpayers with tax disputes can receive help from Low Income Taxpayer Clinics, which offer their services either free or at a low price. Certain qualifications must be met before a taxpayer receives help from such clinics, including income beneath a certain level and the amount in dispute with the IRS, usually lower than $50,000.
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Other options
Other options recommended by Olson that ought to be considered include getting advice from a trusted certified public accountant, lawyer, or "enrolled agent" who is authorized to represent taxpayers before the IRS. Taxpayers should avoid taking advice from companies she refers to as "offer mills."
"They take your money and don't work for you," she warns.