Don’t Panic If You Can’t Afford To Pay Your Taxes
Another year in the gig economy has gotten far enough that the deadline for filing income tax returns is approaching. Without your income from gigs, you wouldn’t even be able to survive paycheck to paycheck; your debt situation would just be in free fall. Your gig income enables you to keep up with your monthly bills, and when business is booming for your side hustle, you might even be able to make a dent in your credit card debt, car loans, or medical debts. Thriving in the gig economy means riding the waves of uncertainty, however. You have been supplementing your income with gigs long enough to know that you are supposed to make quarterly payments to the IRS of the amount that you anticipate owing, which is 30 percent of your 1099 income adjusted for tax deductible expenses and tax credits. If you could afford to do that, though, you wouldn’t be in the gig economy. Tax time is stressful for everyone, but especially for workers in the gig economy, because their employers do not withhold taxes, leaving the entire burden of setting aside money for taxes on the gig workers themselves. To stop your tax debts from getting worse this year, contact a Boca Raton debt lawyer.
The IRS Can Mess You Up If You Don’t Pay
Tax obligations are among the most obligatory debts. It is not possible to discharge them in bankruptcy; in fact, discharging other debts to free up funds to pay overdue taxes is a motivation for some bankruptcy filers. Furthermore, the IRS can use coercive measures to get you to pay your tax debts, including steep penalties and wage garnishment. If you don’t file an income tax return or pay your taxes, you can even go to jail for tax evasion and face criminal fines of $100,000.
Even though you spend all your time in pursuit of gig income, except the time you spend on your salaried job, you might be feeling overwhelmed with bills and debt collection notices. You may have even taken to ignoring some of your debts, but you cannot afford to do this with your tax debts.
Risky Financial Moves That Are Better Than Owing Money to the IRS
If you are going to do something risky to get out of debt, it should be in the service of your tax debt. In the case of most debts, it is unwise to repay them by withdrawing money from your retirement savings or other savings accounts or by taking out a home equity line of credit or otherwise borrowing against your house. If you have to take on other debts to pay down a scary debt, then tax debts are the ones you should pay off with this strategy. You can always pay off a personal loan or home equity loan later, or you can even refinance these or discharge them in bankruptcy, but you do not have this option with tax debts.
Work With a Debt Lawyer to Stay Ahead of Your Tax Debts
A South Florida debt lawyer can help you free up funds to pay your debts to the IRS. Contact Nowack & Olson, PLLC in Boca Raton, Florida to discuss your case.
Source:
investopedia.com/financial-edge/0312/what-happens-when-you-cant-pay-your-taxes.aspx
