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What if I can't afford to pay my tax bill?

One of my good friends likens doing her taxes to playing the slot machines. She puts her financial information into her tax software, presses "Calculate" and hopes for the best. Sometimes she gets a refund; sometimes she owes. Despite my best efforts to get her to do some tax planning, she seems content to stick to her own methods.

She's not alone. Many taxpayers charge blindly into tax season not knowing whether they'll receive a refund or owe Uncle Sam. Without any tax planning, owing a big chunk of money to the government can catch many taxpayers by surprise -- and in some cases, it's such a big surprise that they can't afford to foot the bill. What do you do if you find that you owe taxes come tax time but don't have the ability to pay? Here are a few tips:

1. Double check your taxes. It seems obvious, but doing a quick check on your taxes may lead to deductions or credits that you've overlooked. This year, in particular, the Making Work Pay Credit has confused taxpayers who believe they've already received the credit in the form of withholding (they haven't). Double check your math and make sure you've taken advantage of all the deductions (even if you don't itemize) and credits that you're entitled to claim.

2. File on time. Even if you can't possibly pay what you owe, make an effort to file on time anyway. There are penalties associated with failing to make payment, as well as penalties associated with failing to file on time. Don't compound your problem by incurring both penalties.

3. Explore all options
. Just because you can't write a check for the full amount today, doesn't mean that you can't make a payment. Don't forget that the IRS will accept payment by credit card (just try to use a low-interest card if you have one). You may also be able to borrow from family members -- or take out a home equity loan. If you can finance the taxes you owe from some other source you may have to pay interest, but you'll escape penalties from the IRS.

4. Consider a payment plan.
The IRS is more than happy to take your money over a period of time -- with accompanying penalties and interest. Painful, sure. But it's better than doing nothing. If you owe $25,000 or less in combined tax, penalties and interest, you can enter into an agreement using the IRS' online tool: the Online Payment Agreement (OPA). If you prefer to file through the mail, you can complete a federal form 9465, Request for Installment Agreement. If you owe more than $25,000, you can't file for an agreement online: you'll have to submit the form 9465 and a financial statement known as a federal form 433-F.

5. Ask for a temporary delay. If you have a significant financial issue that makes it impossible for you to pay your taxes now, the IRS may temporarily delay collection until your financial condition improves. This option is strictly up to the IRS -- they determine whether your condition warrants a delay. Penalties and interest will still accrue during this time, and they could put a lien on your property. However, it will give you some breathing room while you get your affairs in order.

6. Consider an Offer in Compromise. If all else fails, you can consider an Offer in Compromise (OIC). An OIC is an agreement between you and the IRS that allows you to pay less than the full amount owed. You should be aware that the IRS has strict criteria for an OIC and there are associated costs (including a filing fee). You may want to consider retaining a tax professional to help you. Just be aware, however, that despite ads on TV claiming that your account can be settled for "pennies on the dollar," the IRS rejects most OIC applications, especially if they believe they can otherwise collect from you.

No matter which option you choose, don't ignore your tax obligations. They won't go away and will likely get worse, resulting in tax liens on your property or garnishment of wages. And keep in mind that the IRS is a great deal more cooperative when they believe you're making an effort to resolve things on your end.

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