Posted On June 19, 2013

Unexpected tax debt not the end of the world for Nevada residents

There are few feelings less pleasant than discovering an “owing” statement from the IRS, especially if it comes unexpectedly. However, for Nevada residents dealing with tax debt they haven’t foreseen, a variety of options exist to help mitigate the issue. Immediate payment need not be the only course of action.

In certain cases, the IRS will extend the opportunity to take advantage of a payment plan. This allows taxpayers owing less than $50,000 to apply to be allowed to pay back their debt in stages, rather than all at once. However, it is important to note that such a plan will typically involve an interest rate, since it is technically considered a loan.

A higher-interest option is to pay back a tax debt using a personal credit card. This can be a risky proposition due to the fact that the balance must be paid down rapidly to avoid hefty interest charges. However, it can be of benefit to a taxpayer seeking to pay off a full amount quickly.

It is also possible to sell investments and other assets in order to fund a tax bill. This can be costly in terms of opportunity, so a cost-benefit analysis may be helpful before taking this step. Additionally, transaction fees for such a process can add up quickly.

Ultimately an unexpected tax debt can happen to anyone. Nevada residents understand the importance of settling IRS debts quickly and effectively to avoid further complications. It may be helpful to explore additional options and seek out advice on how best to deal with an unexpected debt that would work best for an individual’s situation.

Source: Forbes, “3 Potential Ways To Pay An Unexpected Tax Debt,” John Hancock, June 4, 2013