Should I Pay Back Taxes With A Personal Loan?
- June 7, 2019
- Posted by: Platinum Tax defenders
- Category: Tax Relief
Owing money to the IRS is never a good thing. Each year, millions of dollars go unpaid in back taxes. Why is so much money left unpaid? Because taxpayers either don’t know how to pay back their debt, or they don’t have the means to do so. If you owe back taxes to the IRS, you could owe more money than you think. When you don’t pay back taxes on time, you accrue penalties and interest. What do you do if you’re stuck with a tax bill that you don’t have the cash to pay? One solution may be to pay your back taxes with a personal loan. People wonder if using a personal loan is a good idea to pay taxes. In some situations, it might be. However, taxpayers should understand the costs involved first. There are also other alternatives for paying back taxes to consider.
What If I Can’t Pay Back Taxes?
If you can’t pay back taxes, you should first consult a tax resolution expert. A tax relief firm can help you determine what options are available to you. Tax relief experts can often even get you cleared of penalties owed as a result of your tax debt. However, if you don’t pay back taxes on time, there are consequences involved. The IRS can charge penalties and interest until you pay your balance in full.
Penalties for Owing Back Taxes
How much you owe in penalties can differ depending on the issue. Common penalties occur when you fail to file or don’t pay the right amount. For example, say you file your tax return on time, and it correctly shows how much you owe. If you don’t pay the entire amount due when it’s due, the penalty is 0.5% of the back tax amount.
Additionally, the IRS charges a penalty every month on the remaining unpaid tax until you fully pay the debt. The max amount of penalty charges goes up to 25%. For example, if your tax bill is $1,000, the penalty would increase $5 every month to a maximum of $250.
Interest on Back Taxes
The IRS also charges interest on back taxes that compounds daily on the day your tax is due. Interest rates change each quarter. For the third quarter of 2018, the rate is 5% for underpayments. Say, for instance, your tax bill is $1,000. If you don’t pay your back tax bill, but then pay in full six months later, here’s what you owe:
- $30 in failure-to-pay penalties
- $27.33 in interest
So on a $1,000 back tax bill, you end up owing the IRS $1,057.33 total.
IRS Payment Options
If you owe taxes to the IRS that you can’t afford to pay, consult a tax relief professional first. The IRS has several payment options, and a tax resolution expert will know which one is right for you. Don’t attempt to negotiate with the IRS without a tax attorney present. A tax attorney knows your rights and will negotiate on your behalf to get you the best outcome.
Pay in Full Within 120 Days
Are you able to pay your back taxes within a few months? If you can, you may qualify for additional time to pay your back taxes. If you can pay within 120 days, the IRS will not charge any fees. However, interest and penalties continue to accrue until you pay your balance. It’s a good idea to pay as much as you can right away, instead of waiting the full 120 days. Before attempting to settle back taxes with the IRS, consult a tax attorney. A tax relief specialist can tell you if there are better options for repaying back taxes.
If you need more time to pay back taxes, you can apply for an Installment Agreement. When you ask for an Installment Agreement, you tell the IRS how much you can afford to pay per month. If you are thinking of applying for an Installment Agreement, check with a tax attorney first. A tax relief specialist can determine how much you should pay per month. Also, a tax relief expert can negotiate an affordable monthly amount for you with the IRS.
Additional Options to Pay Back Taxes
There are other tax relief options when you owe back taxes. However, before you decide which is best for you, consult a tax relief expert. A tax resolution specialist can guide you so you don’t end up paying more than you should. Working with a tax relief firm will also get you the best possible outcome. Platinum Tax Defenders have years of experience in dealing specifically with the IRS. A top tax defender at Platinum can negotiate a payment plan that’s got your best interest in mind. Tax attorneys also know your rights when it comes to dealing with the IRS.
Pay Back Taxes With A Credit Card
If you can make one full payment, you can pay off back taxes with a credit card. However, you will have to pay a processing fee to a third-party payment processing company. Depending on the processor you choose and your credit card company, this fee will vary. The processing fee for credit card payments currently ranges from 1.87% to 1.99%. You will also want to factor in your credit card’s interest rate when making this decision. Working with a tax relief expert and certified public accountant can help you determine the right tax relief solution. Platinum Tax Defenders employs both CPAs, tax attorneys, and x-IRS attorneys.
Pay Back Taxes With A Personal Loan
Using a personal loan to pay back taxes can seem like a good idea. Depending on your credit, you may be able to get a lower interest rate than with a credit card. Using a credit card or personal loan could be less expensive than an IRS Installment Agreement. It may be less costly because if you pay your back taxes with a credit card or loan, you won’t incur additional penalties or interest. However, it’s important to remember that credit cards and personal loans can have drawbacks as well. Make sure you consult a tax relief professional before deciding which payment method is right for you.
Pay Off Back Taxes For Good By Calling Platinum Tax Defenders Today!
Hiring a tax relief specialist can get you a better deal when attempting to pay off back taxes. A tax relief specialist can also save you a lot of hassle and consequences when you owe back taxes. A tax attorney can help you determine which repayment method is right for you. The tax resolution specialist can also negotiate with the IRS on your behalf and submit the necessary paperwork. Owing back tax debt can leave you in bad financial shape. The IRS only wants to get what money you owe them in back taxes. Often, they are willing to help you settle back taxes, but you have to know how to try. That’s where a tax relief services company can come in handy. When you hire a tax resolution professional, there are other methods you can use to avoid expensive back tax debt. Call Platinum Tax Defenders for a free consultation today.