While many family child care providers get a refund from the IRS when they file their taxes, some don’t.
If you do owe federal taxes, the IRS has six ways for you to pay:
1) Pay your tax bill. If you get a bill from the IRS, you’ll save money pay paying it as soon as you can. If you can’t pay it in full, you should pay as much as you can. Doing so will reduce the interest and penalties charged for late payment. You may want to pay by credit card or get a loan to pay what you owe.
2) Use IRS Direct Pay. This is a safe, easy and free way to pay from your checking or savings account. The tool walks you through five simple steps to pay your tax in one online session. Click on the “Pay Your Tax Bill” icon on the IRS home page.
3) Get a short-term extension to pay. You may qualify for extra time to pay your taxes if you can pay in full in 120 days or less. You can apply online at IRS.gov. If you received a bill from the IRS you can also call the phone number listed on it. If you don’t have a bill, call 800-829-1040 for help. There is usually no set-up fee for a short-term extension.
4) Apply for a monthly payment plan. If you owe $50,000 or less and need more time to pay, you can apply for an Online Payment Agreement on IRS.gov. A direct debit payment plan is your best option. This plan is the lower-cost, hassle-free way to pay. The set-up fee is less than other plans. There are no reminders, no missed payments and no checks to write and mail. You can also use IRS Form 9465, Installment Agreement Request, to apply. For more about payment plan options, visit IRS.gov.
5) Consider an Offer in Compromise. An Offer in Compromise lets you settle your tax debt for less than the full amount that you owe. An OIC may be an option if you can’t pay your tax in full. It may also apply if full payment will cause a financial hardship. You can use the OIC Pre-Qualifier tool to see if your qualify. It will also tell you what a reasonable offer might be.
6) Change your withholding or estimated tax. You may be able to avoid owing the IRS in the future by increasing the amount you pay in estimated taxes using IRS Form 1040-ES, Estimated Tax for Individuals. Or, if you are married, your spouse can have more taxes withheld from his paycheck. Do this by filing a new IRS Form W-4, Employee’s Withholding Allowance Certificate, with his employer.
For more information, see IRS Publication 594, The IRS Collection Process.
This article was taken from the IRS Tax Tips of August 13, 2014 and was slightly edited.
Tom Copeland – www.tomcopelandblog.com
Image credit: www.investopedia.com
For more information about estimated taxes, see my annual Family Child Care Tax Workbook and Organizer.