The best and worst options if you owe the IRS

Tax deadlines are fast approaching. Unfortunately, some people will find that they don’t have enough cash to pay Uncle Sam. That could lead to problems, including interest charges, penalty fees, bank account seizures, and liens on the property.

Fortunately, the IRS offers both short-term and long-term payment plans. Keep in mind that you could still get hit with penalties and interest, raising your overall bill. It’s always best to pay on time if you can.

First, if you’re a bit short on money, the IRS can grant a 180-day extension to pay down your debt. There will be an approved deadline up to 180 days out, and you’ll have to pay in full by then. To qualify for this, you must owe less than $100,000 (including fees and penalties). Can’t pay in that time frame? The IRS offers long-term payment plans if you owe less than $50,000. These plans come with filing fees (totaling less than $200), so keep that in mind.

It’s possible, in some cases, to lower how much you owe. This is achieved through an Offer-In-Compromise (OIC). To qualify, you’ll need to owe more than $10,000. You must also be up to date on your current estimated tax payments. This isn’t a get-out-of-debt-free card, and the IRS will closely evaluate your income and assets, such as property. Generally speaking, the IRS wants to get as much as possible, and that might mean putting a lien on your properties.

How about jail? You can’t be locked up for lacking the funds to pay your taxes. However, if you try to hide money from the IRS, including income, that could lead to court cases and even jail sentences. Simply not filing your taxes is considered a misdemeanor, so make sure you always file even if you can’t pay. Not filing is the worst choice.