Many American citizens are facing an Internal Revenue Service deadline on October 15 This the deadline for the 10 million people who were granted extensions for filing their federal taxes back usually due on April 15. The recent economic turmoil and high unemployment rates may make it still hard for those facing debt problems to manage even this later payment of owed taxes.
Possibly making it easier to pay owed taxes, those who have no outstanding taxes from prior years and owe less that $25,000 may be allowed to set up an installment plan with the IRS to make smaller payments over an established period of time. Fees are charged by the IRS to set up an installment plan. The fee is less if the payments are deducted directly from a bank account. Those paying via an installment plan are still liable for interest and penalties.
Taxpayers who don’t file a past due return or request an extension from the IRS will be subject to large penalties and interest that will add greater hardship by increasing the amount of tax due. If a citizen does not file at all, the IRS will file a substitute return for that person. This return will not include any exemptions or itemized deductions that may have otherwise reduced the tax owed. The IRS can and will garnish wages, freeze bank accounts and place liens on personal property to recover unpaid taxes.
The importance of paying federal income taxes cannot be underestimated especially for those who are already suffering problems with personal debt. Non-payment of taxes will not only increase the amount of the debt but will add considerable strain in other ways as well making it nearly impossible to stick to any current debt management program.
