There’s no headache quite like having to deal with your tax returns. Especially if you are not in the position to fork cash over to the taxman. Unfortunately we can’t do your returns for you, but we have some of the best tax hacks to help ease your pain.
#1. Don’t Forget to File your Tax Return
We can’t stress this one enough. Your new mantra is “Even if you owe money and can’t pay, file your return anyway”. Repeat until it sinks in. If you fail to file, the penalties can be up to 25% of your total tax bill, accumulated over every month you don’t submit your tax return. If you file and don’t pay what you owe, this penalty will only be 0.5% of the outstanding amount per month. That’s a huge difference.
#2. Weigh Your Options
It is much more affordable to pay your taxes when they are due than over time, and payment plan may not be the best option. Consider alternatives, like a personal loan. First prize would be an interest-free loan, say from family, friends, or your boss. You could charge it to your credit card, but beware – most payment processors charge upfront fees, and you will also have the interest on your credit card to contend with.
#3. Buy Time
Speak to your tax service provider, perhaps you can come to an agreement about an installation plan. But, again, all returns need to be filed. If you have a dispute, you may be eligible for suspension of tax payments if you make use of a registered tax professional. Better yet, you may have one with amazing persuasive skills – tax suspensions may only be granted at the discretion of your provider.
#4 The Last Resort
Compromises may also be negotiated by your registered tax professional as a last resort. This entails the debt being wiped clean, however there are many conditions and a huge amount of logistics. For example, you may not apply for compromises of debt within 3 years of each other, or if your tax affairs are not in order. Beware, This will also prejudice other creditors, ensuring that you’re not likely to acquire further credit.
*also see Debt Management