If you’re a Pinellas County business owner, and you owe taxes to the IRS, you’re not alone. It’s common to owe taxes, and a professional accountant can help make sure you’re aware of the options available to you.

 

BizBooks4U offers the peace of mind that comes from knowing you’ve optimized your business’s tax planning, and you can free up more time to focus on the aspects of your business that you’re most passionate about.

 

Tax Planning: What You Need to Know If You Owe

 

If you owe taxes in Pinellas County, it’s helpful to have a tax planning specialist to review your specific situation so that they can provide expert advice. A tax specialist will ensure that you’re aware of all pertinent requirements, helping to minimize the risk of penalties or any time-consuming back-and-forth with the IRS. The two most important things you need to know are:

 

  • File Your Return on Time

 

Taxpayers who know they’re going to owe—and know they can’t pay—often delay filing. Failure-to-file penalties are a significant consequence of insufficient tax planning. Penalties can be as high as 25% of the balance you owe, so be sure to file on time even if you can’t pay.

 

  • Make a Payment Agreement With the IRS

 

To prevent the IRS from potentially filing a tax lien against you, make an agreement with them as soon as possible after filing. Not all Pinellas County taxpayers are aware that Congress passed a law in 2015 that allows the U.S. State Department to revoke or deny the passport of any taxpayer who owes $50,000 or more and has not made a payment agreement.

 

In recent years, the IRS has made it more convenient to arrange a payment agreement. Most agreements can be arranged online at irs.gov. In many cases, using the online tool is much quicker than contacting the IRS by telephone.

 

Our Pinellas County tax planning specialists can advise you on how best to propose a payment plan that the IRS will accept. If you already have a tax lien from a previous filing, professional tax planning can help you pay off the balance and ensure the proper lien-withdrawal procedures are followed and that the lien is removed from your credit report and public record.

 

Determining the Best Payment Strategy

 

Working with a Pinellas County accountant for tax planning advice can ensure that you’re taking full advantage of any options available to you that would benefit your individual case. At BizBooks4U, our tax specialists will analyze your situation to help determine the optimal way to take care of what you owe.

 

Most approaches have both benefits and drawbacks, and it can help to have a professional provide insight from an outside perspective. Typically, business owners will consider one or more of the following options when determining the best method of paying off what they owe.

 

Option 1: Find the Money to Pay in Full

 

A Pinellas County tax planning accountant can help you determine whether or not it makes sense to consider options such as:

 

  • Withdrawing funds from savings or investment accounts. We typically advise against taking distributions from retirement accounts because you’ll then owe taxes on the amount you withdraw (plus a 10% penalty if you’re not yet 59.5 years of age). However, other types of savings and investment accounts may be a viable option.

 

  • Opening a credit card with a low introductory interest rate. Intro offers can be as low as 0%, and this can make sense in certain scenarios.

 

  • Consider a home equity line of credit. Keep in mind that you cannot deduct the interest if you use a home equity line of credit to pay your tax bill because this use doesn’t involve home improvements.

 

  • Consider a bank loan or credit union loan. If you qualify for a low enough interest rate, a personal loan can make sense.

 

  • Pay part of what you owe. If after considering the above, you cannot pay the full amount you owe, make a partial payment. Try to pay as much as you can, to reduce the penalty and the overall interest you’ll pay.

 

Option 2: Request a Payment Extension

 

When you file your tax forms without payment, the IRS will contact you to find out whether or not you can pay within 120 days. If you’re able to, and you agree to pay the full amount within 120 days (approximately four months), the fee is quite reasonable at 0.5% of the amount owed, per month.

 

Option 3: Reduce Your Tax Bill With an “Offer in Compromise”

 

In certain circumstances, the IRS may agree to reduce your tax debt if you meet the requirements of an “offer in compromise.” Typically, for your application to be approved, you must demonstrate that paying your tax liability in full would result in financial hardship; thus, this is a strategy that is usually only considered as a last resort.

 

Pinellas County Tax Planning Now and for the Future

 

The Pinellas County tax specialists at BizBooks4U can help you clean up what you owe, in the manner that’s best for you and your business. You may also want to consider our tax planning services to reduce or eliminate the chances that you’ll owe again for future filings. We offer customized services for all types of businesses, large or small, and we can provide precisely those services that each of our Pinellas County clients needs. Call us at 727-939-1044, or contact us through our website to arrange a consultation.