What To Do If You Get a Tax Bill From the IRS?

Tax Planning

En Español

If the IRS sends you a tax bill instead of a refund check don’t panic, there are several ways to manage this and it does not have to be a nightmare for your personal finances.

 

Sometimes people pay fewer taxes during the year than they are supposed to and that is why the IRS comes back with a bill, but don’t panic. A bill from the IRS does not have to be scary. You just have to manage it like any other part of your finances. Taxpayers have several options. Consider the following:

-You can pay the taxes with a credit card. According to credit card experts such as Cardhub.com, in the current credit environment people with a higher than average credit score could get a credit card with 0% interest rate for more than a year and hundreds of dollars in rewards if they pick the right card.

-It is also possible to call the IRS and establish a payment plan that allows you to pay the tax bill over a period of time up to 6 years. However, the IRS will charge an annual 3% rate for financing the debt. Though 3% is a low rate, it is not better than the 0% deal you can get with a good reward credit card if you have a great credit score and can get approved for one.

-Getting a reward card can be a strategic move for your finances. A reward card is not the usual credit card most people have in their wallets. A reward card can become a cash generator for you if you manage to use it the right way.

-After paying the tax bill with the card, focus only on paying the balance as fast as possible or within the 0% introductory period the card provides. That way you won’t pay any financing charges.

-Once the tax bill is paid and you have a credit card ready to use for other expenses, change your behavior and whatever you spend during the month pay it in full at the end of each period. That way you won’t pay finance charges and you will also accumulate miles or rewards. You can use the rewards in many ways such as purchasing from your favorite stores or to pay for airline tickets or hotels.

-Credit Cards with rewards can generate more benefits than costs.

If you don’t have the credit score to get a reward card ,the best way to pay the tax bill is by establishing a payment plan with the IRS. You just have to wait until you get the bill in the mail and call the IRS to negotiate a monthly payment. The IRS is quite flexible as they want you to pay. You may have to pay a fee to establish the plan and start paying the next month.

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