Managing Your Money

Recently unemployed and unable to pay your taxes?

It's tax season again....time to settle up with Uncle Sam. If you have completed your return but do not have enough cash to pay the taxes you owe because you were (or are) unemployed, you should know that the IRS is offering some help. That help comes in the form of extra time to pay your federal tax bill. This year, the IRS will give you six extra months to pay your taxes if you were unemployed for at least 30 continuous days in 2011 or 2012 (up to the tax filing dealine of April 17, 2012). If you take advantage of this program, you will be charged interest on the amount due but not paid but you will not owe a late payment penalty. That might not sound like much of a deal but the late payment fee is 5 percent per month.

If you were working in 2011 and 2012 but still find yourself unable to pay your federal tax bill you should consider paying in installments over time. To do this, you need to file IRS Form 1127.

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