Here’s how to raise money for the IRS.
- If you underpaid your taxes in 2021, you will need to pay that balance to the IRS by April 18.
- If you don’t have that money in savings, here are some options.
Tax season is now well underway and many people are tackling their returns well before the April 18 filing deadline in a bid to get their refunds sooner. But what if you’ve worked out the numbers and you don’t get a refund, but instead owe the IRS some money?
This is a situation you could find yourself in this year for a number of reasons. Maybe you did a lot of side work in 2021 that you never paid taxes for, and now you’re sitting on a bill. Or you may have sold investments for a profit and owe the IRS money because of it.
Whatever the reason for your underpayment, your 2021 tax bill is due by April 18 at the latest. If you do not pay it on time, penalties and interest will be imposed on you for delay. If you don’t have enough money in your savings account to cover the bill, here are some options to build it up quickly.
1. Temporarily work in parallel
There’s a lot of gig work you can pick up in addition to your main job. If you’re hoping to scrape together enough money to pay the IRS in about two months, dealing with a side hustle might be the answer. Remember that this side gig isn’t something you’ll have to maintain forever – you’ll just have to stick to it to increase your short-term cash reserves.
Take a look at what you owe the IRS, then come up with different side hustle strategies. If you need to come up with $800 and have about eight weeks to do so, you might want to focus on side gigs which will likely net you $100 a week.
2. Reduce your expenses significantly
If you normally manage to pay all of your bills each month without having to carry a balance on your credit cards, there’s nothing wrong with treating yourself to things like store-bought coffee, takeout and a slew of streaming services for those nights and weekends you’d rather not leave the house. But if you now owe the IRS money, you may need to temporarily reduce those expenses.
Say you normally spend $50 a week on takeout, coffee, and streaming service. If you owe the IRS $800, eliminating those expenses could see you paying half your tax bill by mid-April.
3. Sell items you don’t need
Your home may be full of items you no longer need or use, but someone else might want. Take inventory and make a list of items you can sell for a decent amount of money. Then figure out the best way to sell those items.
If you have electronics that aren’t too bulky or expensive to ship (like an old cell phone), you can use sites like eBay to find a buyer. If you have larger items to offload, like furniture, try advertising on your city’s social media page or local market groups. If you’re able to get enough money for the items you’re selling, it could make a huge dent in your IRS bill – if not cover it entirely.
Because of the IRS money is never fun. If this is the situation you find yourself in, you still have time to come up with a plan to accumulate that money. That said, if you fail to rack up that money by April 18, don’t panic. The IRS will usually allow you to get an installment plan to pay off your tax debt over time. Charges may apply and you will be charged interest and penalties until your balance is fully paid off. But you won’t have to worry about your wages being garnished by the IRS to get the money owed to them.
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