Tips and Advice

3 Careless Ways to Deal With Tax Debt

Unfortunately for many, once we file our taxes it means that we’ll be indebted to the “man”. Here are three methods you shouldn't use to pay that bill.
dealing with tax debt
Edited by:
Kristin Marino verified

dealing with tax debtWhen the IRS comes calling, it is a call that you have to answer. Unfortunately for many of us once we file our taxes it means that we’ll be indebted to the “man” and will have a bill to pay.

Hopefully you saved enough money last year to be able to pay your debt off easily. If you didn’t, you’re probably racking your brain trying to figure out how you can afford this and the rest of your bills. At this point you might even be considering a personal loan if the IRS can’t grant you an extension on your debt. While we don’t have too many solutions besides re-doing your budget and saving up, here are methods you should avoid according to Forbes.

  • Use Your Retirement Funds. We’ve already mentioned that you’re basically stealing from your future self if you do.
  • Pawn Your Stuff. While selling your stuff might seem like a good idea, many people might sell their prized possessions hoping to get them back once they’ve saved enough. Don’t toy with your money or your goods; you could end up losing both battles.
  • Ignore It. This is one notice you do not want to set aside as you’ll incur late payment penalties, be hit with a tax lien, and possibly hurt your credit score.

Despite them being thought of as the big bad wolf, the IRS can actually work with you on developing an installment plan if you owe money. Rather than turning a blind eye or using other methods to pay, find a solution that will work for you now and in the future.