Can't afford to pay your taxes? Here are your options - CNBC

guduka.blogspot.com

Select’s editorial team works independently to review financial products and write articles we think our readers will find useful. We may receive a commission when you click on links for products from our affiliate partners.

Many have been in this scenario: You file your taxes using an online tax software, paper filing or an accountant, and after entering all of your numbers (and double checking them for accuracy), you're hit with a fact you've been dreading — you owe the government money.

Fortunately, the IRS accepts a variety of payment methods, from good old-fashioned paper checks to debit and credit cards. (Just be sure to consider all the fees when you pay taxes with a credit card.) I recently did my taxes using TurboTax, and I was surprised that PayPal is now listed as a payment option, too.

But what happens when you can't afford to pay your tax bill in one big lump sum? Both the IRS and most state tax agencies offer payment plans that you set up when you file or shortly after. You can typically select this option at the time of e-filing and either be redirected to the appropriate website or prompted to verify your information so the respective tax office can reach out to make arrangements.

The IRS handles payments through its mobile app, IRS2Go, or else you can make payments over the phone, online or via check. All of the federal tax payment options are listed on the IRS payment page.

There's a penalty for failing to file a tax return, so you should file on time even if you can't pay your balance in full. In 2021, the deadline to file your 2020 taxes is May 17. It's better to file and set up a payment plan than to avoid filing because you're worried you can't afford to pay taxes.

Here are the service fees for setting up tax payment plans:

Short-term payment plan fees (120 days or less)

After applying for a short-term payment plan, you can pay the amount owed directly from your checking or savings account (Direct Pay) or by check, money order or debit/credit card. Here are the fees you'll pay with the short-term payment plan:

• $0 setup fee
• Interest until the balance is paid in full
• Penalties for non-payment up to a maximum of 25% unpaid tax amount until balance is paid in full

Learn more about IRS interest and penalties.

Long-term payment plan fees (more than 120 days)

Long-term option A: Monthly automatic withdrawals

With this plan, you pay a set monthly amount through automatic withdrawals, similar to an installment loan. It's the least costly of the long-term plans. These are the fees associated with the long-term payment plan via monthly automatic withdrawals:

• $31 setup fee (if you qualify as low income, the setup can be fee waived)
• Interest until the balance is paid in full
• Penalties for non-payment up to a maximum of 25% unpaid tax amount until balance is paid in full

Learn more about IRS interest and penalties.

The payments accepted with this plan are more limited, with just one option called the Direct Debit Installment Agreement (DDIA). This is essentially an authorized debit withdrawal from your checking account, and it's required for this plan.

Long-term option B: Pay each month (non-Direct Debit)

This option doesn't require setting up DDIA, giving you more flexibility. But it will cost you more in fees:

• $149 setup fee (if you qualify as low income: $43 setup fee that may be reimbursed if certain requirements s are met)
• Interest until the balance is paid in full
• Penalties for non-payment up to a maximum of 25% unpaid tax amount until balance is paid in full
• Applicable card transaction fees

After applying for this plan, you'll pay the the taxes you owe via non-Direct Debit (not automated) monthly payments, including payments directly from your checking or savings account (Direct Pay) or by check, money order or debit/credit card.

Other options to pay your taxes over time

The IRS charges set-up fees for those who need to pay their taxes over time. But there might be more affordable options, such as using a 0% APR credit card to pay your tax bill or even taking out a personal loan.

When comparing costs, look at how much the interest and fees will cost you over time. Both personal loans and credit cards charge interest, but if your credit score is good enough to qualify you for low interest (or, even better, no interest) credit card, you should do the math to find out which payment option is cheaper. Add up the total interest, fees and penalties for all options based on how long you'll need to pay off the balance. Then choose the one that costs the least over time and has a monthly payment you can afford.

Here are a few of our best picks for 0% APR credit cards and personal loans.

Intro 0% APR for 20 months

U.S. Bank Visa® Platinum Card

Information about the U.S. Bank Visa® Platinum Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

• Rewards

• Welcome bonus

• Annual fee

• Intro APR

  0% for the first 20 billing cycles on balance transfers and purchases

• Regular APR

  13.99% to 23.99% variable

• Balance transfer fee

  3%, minimum $5

• Foreign transaction fee

• Credit needed

  Excellent/Good

Pros

• 20 months of no interest on balance transfers and purchases
• No annual fee
• Cell phone protection plan

Cons

• No rewards program
• 2% to 3% foreign transaction fee
• Balances must be transferred within 60 days from account opening

Intro 0% APR for 18 months

Citi® Double Cash Card

On Citi's secure site

• Rewards

  2% cash back: 1% on all eligible purchases and an additional 1% after you pay your credit card bill

• Welcome bonus

  No current offer

• Annual fee

• Intro APR

  0% for the first 18 months on balance transfers; N/A for purchases

• Regular APR

  13.99% - 23.99% variable on purchases and balance transfers

• Balance transfer fee

  3%, minimum $5

• Foreign transaction fee

• Credit needed

  Good/Excellent

Pros

• 2% cash back on all purchases
• Simple cash-back program that doesn't require activation or spending caps
• One of the longest intro periods for balance transfers at 18 months

Cons

• No welcome bonus, so you can’t maximize rewards during the first few months of card opening
• Minimum cash-back redemption of $25
• 3% fee charged on purchases made outside the U.S.

• Estimated rewards earned after 1 year: $443
• Estimated rewards earned after 5 years: $2,213

Intro 0% APR for 15 months

Amex EveryDay® Credit Card

Information about the Amex EveryDay® Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

• Rewards

  2X Membership Rewards® points at U.S. supermarkets on up to $6,000 per year in purchases (then 1X), 1X Membership Rewards® points per dollar spent on all other purchases

• Welcome bonus

  Earn 10,000 Membership Rewards® points after you make $1,000 in purchases in your first 3 months

• Annual fee

• Intro APR

  0% for the first 15 months on purchases, N/A for balance transfers

• Regular APR

  12.99% to 23.99% variable

• Balance transfer fee

• Foreign transaction fee

• Credit needed

  Excellent/Good

Pros

• No annual fee
• Competitive intro period on purchases
• 20% extra point bonus when you make 20 or more purchases in a billing period

Cons

• 2.7% foreign transaction fee

Best personal loan for good to excellent credit

LightStream Personal Loans

On LightStream's secure site

• Annual Percentage Rate (APR)

  2.49% to 19.99%* when you sign up for autopay

• Loan purpose

  Debt consolidation, home improvement, auto financing, medical expenses, wedding and others

• Loan amounts

  $5,000 to $100,000

• Terms

  24 to 144 months*

• Credit needed

• Origination fee

• Early payoff penalty

• Late fee

Terms apply.

Best personal loan for fair/average credit

Upstart Personal Loans

On Upstart's secure site

• Annual Percentage Rate (APR)

  8.27% to 35.99%

• Loan purpose

  Debt consolidation, credit card refinancing, wedding, moving or medical

• Loan amounts

  $1,000 to $50,000

• Terms

  Three and five years

• Credit needed

  FICO or Vantage score of 580 (but will accept applicants whose credit history is so insufficient they don't have a credit score)

• Origination fee

  0% to 8% of the target amount

• Early payoff penalty

• Late fee

  The greater of 5% of monthly past due amount or $15

Terms apply.

Still waiting to file? The tax deadline is approaching

There's just about one week left to file taxes on time without penalty, with the May 17 deadline just around the corner. As many as 90% of taxpayers file electronically, since it's faster, easier and more convenient.

Select reviewed 12 tax filing programs that can help you file your taxes faster. We evaluated them on a range of features, including cost, user experience, expert tax assistance and Better Business Bureau rating.

Here are the best tax filing programs:

TurboTax

On TurboTax's secure site

• Cost

  $0 to $170 federal, $0 to $50 per state (see breakdown by plan below)

• Free version

• Mobile app

• Live support

  Yes, costs extra

• Better Business Bureau rating

Pros

• Step-by-step guidance with a Q&A format that is easy to follow
• TurboTax Live provides on-demand advice and a final review from a tax expert or CPA
• Live Full Service has a tax expert prepare, sign and file your return
• 100% accuracy guarantee, or TurboTax will pay your IRS penalties
• Maximum refund guarantee, or TurboTax will refund the plan fees you paid
• Audit support, which provides free assistance if you get an IRS or other tax notice

Cons

• More costly than other software programs
• Live expert assistance plans cost $50 to $70 more for federal and $10 more per state
• Live Full Service charges an additional $80 to $100 for federal, state is additional

Cost breakdown by plan:

• Free (for simple returns): $0 federal, $0 per state
• Deluxe (helps you maximize credits and deductions): $40 federal, $40 per state
• Premier (includes returns with investments and expenses): $70 federal, $40 per state
• Self-employed (for personal and business income and expenses): $90 federal, $40 per state
• Live Basic (includes help from tax experts): $0 federal, $0 per state (must file by 2/15/21)
• Live Deluxe (includes help from tax experts): $90 federal, $50 per state
• Live Premier (includes help from tax experts): $140 federal, $50 per state
• Live self-employed (includes help from tax experts): $170 federal, $50 per state

Our methodology

To determine which credit cards offer the best value, CNBC Select analyzed 234 of the most popular credit cards available in the U.S. We compared each card on a range of features, including rewards, welcome bonus, introductory and standard APR, balance transfer fee and foreign transaction fees, as well as factors such as required credit and customer reviews when available. We also considered additional perks, the application process and how easy it is for the consumer to redeem points.

CNBC Select teamed up with location intelligence firm Esri. The company's data development team provided the most up-to-date and comprehensive consumer spending data based on the 2019 Consumer Expenditure Surveys from the Bureau of Labor Statistics. You can read more about their methodology here.

Esri's data team created a sample annual budget of approximately $22,126 in retail spending. The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953). General purchases include items such as housekeeping supplies, clothing, personal care products, prescription drugs and vitamins, and other vehicle expenses.

CNBC Select used this budget to estimate how much the average consumer would save over the course of a year, two years and five years, assuming they would attempt to maximize their rewards potential by earning all welcome bonuses offered and using the card for all applicable purchases. All rewards total estimations are net the annual fee.

While the five-year estimates we've included are derived from a budget similar to the average American's spending, you may earn a higher or lower return depending on your shopping habits.

Information about the U.S. Bank Visa® Platinum Card and Amex EveryDay® Credit Card has been collected independently by Select and has not been reviewed or provided by the issuers prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

Adblock test (Why?)

"payment" - Google News
May 11, 2021 at 04:56AM
https://ift.tt/3uBpEhz

Can't afford to pay your taxes? Here are your options - CNBC
"payment" - Google News
https://ift.tt/3bV4HFe
https://ift.tt/2VYfp89

Bagikan Berita Ini