For some, spring isn’t about new beginnings, but anxiety, worry and financial struggle. Every April, when we tally up our yearly earnings, many of us have to fork over some hard-earned money to Uncle Sam. Still, what do you do when April rolls around and you need to pay taxes, but don’t have the money?
Work with – Not against – the IRS
First, don’t panic. You have lots of different options. However, you’re going to have to find the plan that best suits your needs. There is a penalty for paying your taxes late, but it’s not nearly as severe as filing your taxes late. In other words, you need to file. Don’t neglect or attempt to circumvent your responsibility. It’s always best to try to work with the IRS. For example, one easy solution is to set up an instalment plan. In the end, the U.S. government doesn’t care when it gets its money, as long as the taxes are paid.
Bank Loans, Credit Cards and Home Equity
While an IRS installment plan could work well for some people, others would rather have the money to pay their taxes immediately. You might not want another financial burden hanging over your head. Of course, money doesn’t grow on trees, but it can be found in unlikely places. While borrowing money from family, friends and banks are traditional ways to acquire funds, there are also other options. For example, let’s say a payment is due on the 15th, but you don’t get paid until the 20th. One option is to take out a payday loan or advance so you can pay on time. Home equity and credit card advances provide another way for you to get the cash you need to pay your taxes. Just be sure to read the fine print concerning interest rates. Finally, if you’ve accrued a large amount of paid vacation time at work, this is when you should cash it out. This money is often overlooked. Think of it as an emergency savings account.
Other Strategies to Generate Extra Cash
If you know your funds are low and tax time is approaching, you could have a yard sale, sell your old jewellery or get a second job. There’s a good chance your basement is filled with all sorts of things you no longer need. This is the time to put a price tag on that old couch and get rid of it. You will be surprised at how much extra money can be generated from a weekend yard sale. A part-time, second job is another way to make extra money. While a second (or third) job is the type of thing many of us don’t want to do, our financial responsibilities are not going to disappear any time soon.
Generally speaking, if you find yourself struggling to pay taxes one year, planning in advance can help prevent the same problem from occurring again. You can set aside some extra money for April. Nobody wants to have to scramble for funds when tax time rolls around. Then again, life throws a lot of curve balls, right? It’s important to know what your options are.