As tax day draws near, some people may be surprised to discover they owe money — or owe more money than they expected.
What should you do if you can't pay taxes?
If you think you may have trouble paying your full tax bill, don't panic. There are ways to ease the burden. First and foremost, file a tax return or file for an extension by the April deadline.
File a tax return
Whatever you do, don't ignore Uncle Sam. You must file a tax return. The penalty for not filing is 10 times more than the penalty for not paying.
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If you fail to file by the April 15th deadline, you could face a penalty of 5 percent of your unpaid tax bill, plus interest, for each month the return is late - until the penalty hits 25 percent of what you owe.
If you file, but fail to pay your taxes, the penalty is only half a percent of your unpaid tax bill, plus interest, each month.
File for an extension
If you need more time to gather paperwork, file for an extension. Last year, more than 11 million taxpayers requested an extension.
File for an extension by April 15th and you'll have until Oct. 15 to submit your tax return. By filing an extension, you've cut down on the penalties you'd pay by not filing at all, plus you'll get an automatic extension for six months to get your tax return in. Just remember, it's an extension to file — not an extension to pay. Starting April 16, if you have a tax liability and owe money to the IRS, interest and penalty begin to accrue on your tax bill.