Most years when tax season rolls around, a good bulk of Americans flood e-commerce and local malls with all their income tax return money, blowing it fast on a new Spring/Summer wardrobe or booking flights for their next vacation. However, according to various resources, this year is looking very different.
According to CNBC, the average tax refund is down 8.7% from last year and a lot of people report owing money for the first time. So, what do you do if you actually owe money — and lots of it — this year? We spoke to some tax experts to get their top five tips on how to handle it.
Above all, experts agree that whatever you choose to do to handle the debt, you should never just ignore your tax obligations.
“Don’t let your tax debt sit,” says Alice Stevens, of Best Company.com a tax relief resource. “If it is left unpaid, the IRS can impose levies, liens, wage garnishments, and penalties. Stay on top of your tax debt, even if you can’t pay the full amount immediately.”
“You’re looking at combined penalties of 5% per month that you don’t file or pay — that’s 10 times or 100% the penalty for simply failing to pay your tax liability on time,” Logan Allec, a CPA and owner of the personal finance site Money Done Right, warns.
Worst case scenario: Remember when Wesley Snipes and Lauryn Hill went to prison for unpaid taxes? It can come to that if you neglect your taxes, and they are so not #taxgoals.
Here are more viable ways to make it through the storm.