Updated: May 13
*The 2020 income tax filing and payment deadlines for all taxpayers who file and pay their Federal income taxes on April 15, 2021, are automatically extended until May 17, 2021. However, the 2021 1st quarter estimated tax payment deadline remains as April 15, 2021.
Tax season can be a stressful time. Independent contractors who do not have taxes taken out of their paychecks are particularly susceptible to this difficult time of the year, and often grapple with what to do if they cannot pay their tax liability.
If you are in this situation, or know someone who is, we have compiled the top tips for contractors who cannot pay their tax bill.
The following are 4 key tips for any US citizen who cannot pay the IRS the money they owe.
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Tip #1 - File Your Taxes.
Even if you cannot pay taxes owed, filing your tax return is the best course of action. From day one, the IRS will assess a penalty if you fail to file your taxes on time.
It is never a good idea to avoid filing your taxes. You may think that you can sidestep these responsibilities without too much consequence, but the truth is you will be penalized. The taxes owed will not go away, and your debt to the IRS will grow every day you fail to file.
Think of it like taking a shortcut down a road that’s known to be unsafe (not filing/paying your taxes). It may be the quickest way to your destination (your profit), but you will end up losing time (money) in the long run. There are dangers along that route in the form of hidden potholes (penalties), buildup of mud and debris on your windshield (compounding interest), and a hazard taking you off the road completely (your settlements and bank accounts being garnished). The best route is the safest route, and that is where ATBS comes in – ready to guide you to tax safety.
Nothing positive will come out of not filing your taxes. If you think you are gaining financial freedom, you are mistaken. You can actually create many more problems for yourself and accrue more penalties and interest than you may realize.
Tip #2 - File An Extension.
If you are not prepared to file you tax return, you can file for an extension. The extension deadline typically falls in mid-October.
Although filing for an extension is an option, it does not prevent you from having to pay your taxes. You still need to file either by April 15th*, or by the extension due date to avoid a significant penalty for failure to file.
Tip #3 - Do Not Ignore IRS Notices.
If you have already failed to file your taxes, you will be sent a series of notices once a tax return is determined to be delinquent. Do not ignore these notices! Call ATBS or your tax professional immediately. The best chance of getting you safely off that treacherous road is by working towards a solution as soon as possible. ATBS helps thousands of clients with tax resolution, and can determine the best course of immediate action.
Letters from the IRS will not go away, and they will increase in severity. Ignoring these letters will often culminate in garnishment of wages or settlements. If you reach the garnishment stage, you’re in big trouble. Do not let it get this far! Getting out of a garnishment quickly is a difficult thing to do. If you have debt with the IRS, the sooner you call ATBS the better the options available will be. We will help to prevent a wage garnishment or settlement. ATBS is here to help you!
Tip #4 - Let The Experts Help Lower Your Tax Bill.
If you work as an independent contractor in a specific field, there can be a long list of expenses and tax deductions. Tax experts who dedicate themselves to a specific industry tend to be more successful in finding ways to significantly lower your taxes.
At ATBS, we have an experienced team of tax resolution specialists. These individuals work with the IRS and can advise on your behalf, negotiating ways to effectively reduce any tax burdens you may have. We have had cases where clients owed hundreds of thousands in tax debt, and successfully helped them settle for less than $500.00. ATBS clients often experience a huge sense of relief once they turn to us for help with their tax resolution.
ATBS can help prevent potential tax problems. These issues can happen, but that’s why we’re here. We can help move you forward, and get you back on the road to success!
Over 150,000 owner-operators have made the choice to hire ATBS over the past 20 years. We offer a variety of services including accounting, bookkeeping, and tax preparation. We also offer unlimited business consulting for our RumbleStrip Professional clients. A dedicated business consultant will help you keep your business “between the lines,” just like rumblestrips on the highway. If you’d like to learn more about ATBS services or want to get started today, give us a call at 866-920-2827.