tax deadline

[redwoodempire]

While I'm not finished, it looks like I may owe approx 40k in taxes. I do not have the money. Is it still important to file as soon as possible? what penalties will I face? Is it worse if i wait until I have the money? (i'm selling a home and expect the money in a few months)

[Katherine S 63 · Accepted solution]

Great question!!!

It is best to file your taxes and then go to your IRS account and set up a payment plan.  Here is a link to set up an account.  

IRS account to view transcript, set up payment plan and make estimates  Once you create your account, go to Tax Records, Get Transcripts, put in a reason, GO.  Then you will see all of your transcripts.  You can also set up a payment plan, and make estimated payments with your IRS account.

Start making payments and then when you have more money, you can go in and pay off your payment plan.

I would also suggest that if you think this will happen again next year, you change your withholdings for any W2 income by changing your W4.  I have a W4 calculator below and a copy of the actual W4.  You can add extra withholdings to line 4c on the W4.  Make the changes and give it to your payroll department.

W4 calculator

Form W4

You can also send in estimated payments.  Estimated payments should be sent in April, June, Sept and January.  You can pay them within your IRS account.

Please give me a thumbs up if this was helpful.

Katie S.