Tax Bill Relief
Taxpayers have just hours left until the tax deadline on April 17. If you owe Uncle Sam a big check, Kelli Grant, Senior Consumer Reporter for SmartMoney.com has some tips on how to lessen the load.
Apply for relief options. The IRS offers taxpayers who were unemployed for at least 30 consecutive days in 2011 a little extra time to pay. They have until October 15 instead of April 17 to pay taxes owed, without worrying about penalties. But it's only available to individuals making less than $100,000; couples, less than $200,000. And you'll need to file an extra form, 1127A, to claim relief.
Contribute to an IRA. You can make a contribution as late as April 17 and count it toward last year's tax bill. Consumers may be able to make a tax-deductible contribution of up to $5,000; $6,000 if you were 50 or older last year. That could cut your tax bill by roughly $1,250. But eligibility tarts to phase out if your employer offered a retirement plan and you made more than $56,000 last year.
Set up a payment plan. The IRS allows consumers to set up installment plans for their tax bill, with a one-time setup fee of up to $105, as well as monthly minimum payments of $25. Those can be debited from a checking account or pulled out of your paycheck. But you'll need to apply to have a plan approved - and signing up means the IRS can use any future refunds you receive toward the debt until the balance is paid off.
Pay off dept fast. The IRS waives its installment plan fees of $43 to $105 if you pay your bill in full within 120 days. If you just need a little more time paying your bill, this might be the way to go, although it still requires the government accept your application.
Pay with credit. This solution is far from ideal, but consumers can put their bill on plastic. You'll pay a fee of roughly 3%, which gets added to the balance. If you're going this route, look for the lowest-rate card possible, ideally, one that has a 0% purchase rate on it for the next year. That, and the biggest monthly payments you can manage, may help you dig out from the debt faster.
For more information on paying your taxes and other consumer tips click here.
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