Can't Pay Your Tax Bill? Don't Ignore It! Here's a Step-by-Step Plan to Tackle It – Ep. 215

Taxes. They're not the most exciting part of running a business, but they're unavoidable. If tax season snuck up on you and you're staring down a bill you can't pay, don't panic, we've got you covered!

In this episode, Danielle Hayden, CPA and founder of Kickstart Accounting, Inc., walks you through what to do when you can't pay your IRS tax bill. From filing your return (even if you can't pay right away) to exploring payment plan options, Danielle breaks it down with practical strategies to take control of your finances and stay out of trouble with the IRS.

Key Takeaways:

• Step 1 - Don't Ignore the Problem: Avoiding your tax bill only makes things worse. The IRS can impose serious penalties, so taking action right away is crucial.

• Always File Your Tax Return, Even If You Can't Pay in Full: The failure-to-file penalty is significantly higher than the failure-to-pay penalty. Filing on time helps minimize extra costs.

• Step 2 - Pay What You Can: Some payment is better than none. Put the amount of money towards the tax bill you can afford, and begin assessing the options available to you to pay the remaining balance.

• Step 3 - Evaluate Your Payment Options: The IRS offers short-term and long-term payment plans, often at lower interest rates than credit cards or loans.

• Weigh Your Financing Choices Carefully: Compare the IRS interest rate (around 8%) with other options like credit cards or personal loans to determine the most cost-effective way to pay your tax bill.

• Bonus Tips:

• Plan Ahead to Avoid Future Tax Surprises: Set aside money regularly for taxes, pay estimated taxes quarterly, and use financial statements to track your tax liability.

• Have a "Money Team": Having a trusted bookkeeper and tax accountant working together can help you stay ahead of tax season and avoid stressful surprises.

Topics Discussed:

Why You Shouldn't Ignore Your Tax Bill (00:02:08 – 00:03:06)

Filing Your Tax Return vs. Waiting Until You Can Pay (00:02:36 – 00:06:43)

IRS Payment Plans and Evaluating All Financing Options (00:07:36 - 00:08:04)

Smart Strategies to Avoid This Situation in the Future (00:08:04 – 00:11:17)

The Importance of a "Money Team" (aka a bookkeeper and tax accountant) (00:11:17 – 00:12:15)

Resources:

All Our Episodes & Articles on Taxes | Tackle Your Taxes with Kickstart Accounting, Inc.

KSA Tax Partners | https://ksataxpartners.com/

Free Gift | 'How Much to Pay Yourself as a Business Owner' Calculator

Book a Call with Kickstart Accounting, Inc.:

https://www.kickstartaccountinginc.com/book

Connect with Kickstart Accounting, Inc.:

Instagram | https://www.instagram.com/Kickstartaccounting

YouTube | https://www.youtube.com/@businessbythebooks

Facebook | https://www.facebook.com/kickstartaccountinginc