Lisa Allen

Oops!
Oops!

What do you do when your expected tax refund turns out to be a big fat tax bill? The problem gets even worse for those who have to come up with much more than the few hundred dollars left in their checking accounts, most of which is already set aside for groceries, rent, and the electric bill.

Keep calm
Resist the urge to stick your head in the sand and hope the IRS will just go away. They won’t, and avoiding the problem will only make it worse. To minimize the damage, file your return and send as much money as possible. By sending your paperwork, you’ll avoid steep penalties imposed for the failure to file a timely return.

Trading debt for debt
You can get the IRS off your back by coming up with the money using your credit card or some other form of consumer loan, like borrowing against your home equity. Of course, borrowing to pay your tax bill will only transfer your debt from one place to another, but it will keep the tax collectors at bay.

Negotiate at the source
If you’d rather deal with the IRS directly, you can. Virtually anyone who owes less than $25,000 in taxes, penalties, and interest can request an installment agreement.

Making a choice
The IRS maintains that it’s less expensive to pay your taxes by credit card or by borrowing against your home, real estate, or other investments. In part, that’s because the IRS keeps levying interest and penalties as long as you have some unpaid tax debt left outstanding. However, the interest rate charged by the IRS may be lower than the interest rate imposed by your credit card. You’ll have to do some math, and some soul searching, to decide which option makes the most financial and emotional sense.

Latest Stories

in Music

Taylor Swift ‘Shakes Off’ country image

taylorswift

The "Shake It Off" singer fought with her record label to ditch her country girl image and become a pop star.

in Entertainment

TLC cancels ‘Honey Boo Boo’

honeybooboo

The hit reality TV show is off the air after allegations family matriarch Mama June is dating a convicted sex offender.

in Entertainment

Christian Bale to play Steve Jobs in new biopic

bale

The "Dark Knight" star will portray the late Apple Computer co-founder.

in Music

Britney Spears to get key to Vegas, her own day

britney

Sin City will celebrate Britney Spears Day on Nov. 5.

in Entertainment, Viral Videos

Zack Galifianakis interviews Brad Pitt on ‘Between Two Ferns’

twoferns

The comic gets in some good digs at the "Fury" star in this hilariously awkward interview that's crashed by Louis C.K.