Tax Debt Loans
In most cases, a personal loan can be a good solution for paying off IRS debt.
You might be able to borrow at a lower rate than the IRS interest plus the penalty.
Checking your loan options does not affect your credit score.
Tax Debt Loan Options
If you need time to pay off IRS debt, a short-term personal loan is a solution. You borrow money from a private lender and use that money to pay your tax debt.
If you think you owe money to the IRS, your first priority should be to file your tax return before the deadline. It doesn’t matter if you can’t pay your taxes. Just file your return on time. The IRS imposes a hefty penalty for failing to file when you owe money and don’t submit a return. For each month you delay in filing, a 5% penalty is added to your unpaid balance, up to a maximum penalty of 25%. This adds up quickly, so don’t delay filing. You will need to pay interest on the loan, but the interest rate is likely to be lower than the IRS’s interest rate plus penalties. The better your credit score, the higher your chances of qualifying for a loan with a low-interest rate. Additionally, with a personal loan, you won’t have to worry about the IRS eventually garnishing your wages or forcing you to sell other assets, or filing a tax lien against your property. You only need to make your monthly loan payments. Many personal loans come with no prepayment penalties, meaning there’s no extra cost if you can pay off your loan early to save on interest.
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Our clients love how easy our process is and the valuable time they can save by using our service. Our lenders and lending partners are ready to provide you with the funds you need to pay your tax debt.
Pay your tax debt and get the IRS off your back.
Details on Tax Debt Loans
The IRS can be relentless when you owe back taxes, along with the interest and charges associated with late payments. However, you might be able to pay off the IRS in one go and gain some peace of mind. This guide covers personal loans as an option: how to obtain them and why they might be suitable for you. You can use a personal loan for nearly any legitimate purpose, including IRS debt. Typically, you can borrow between $1,000 and $40,000 and take between one and five years to repay it. When applying for a personal loan, you are usually asked what you plan to use the loan for. Your reason is a factor used by the lender when evaluating your application and could affect your approval as well as the terms of your loan. As you can imagine, paying taxes might be considered more responsible than paying for a vacation.
Not Paying Your Taxes on Time
You will incur a large penalty if you fail to file your tax return on time and owe money. Expect to pay an additional 5% of your unpaid balance, up to a maximum penalty of 25%, for each month you delay filing. Even if you’re worried about how you’ll pay your taxes, it’s a good idea to file your return on time to avoid those hefty penalties. The IRS will still penalize you, but it will be much less. You’ll pay 0.5% of the amount of taxes you owe for each month of delay, up to a maximum of 25%. This adds to the interest accruing on unpaid taxes. The IRS typically charges an interest rate of 3% plus the short-term federal rate at 3% above the short-term federal rate. Going months without paying your taxes can have even more drastic consequences, with the IRS garnishing your wages, placing a lien on your property, or even seizing your assets for repayment. Failing to file a tax return is costly. If you owe money to the IRS but don’t file a return, you’ll incur quite severe penalties. In addition to charging you interest, the IRS will assess a failure-to-file penalty, which is generally 5 percent of the tax due for each month or part of a month your return is late. The penalty will not exceed 25 percent of your unpaid taxes, according to the IRS.
Personal Loan for Tax Debt
In most cases, a short-term personal loan is an ideal solution for paying IRS debt. You can borrow money from a private lender, usually at a lower rate than the IRS’s interest plus penalties. Obviously, the better your credit score, the higher your chances of qualifying for a personal loan with a low-interest rate. If you don’t know your current credit score, you can check it for free here. There are several benefits to using a personal loan to pay taxes. When you pay your tax bill in a lump sum, you don’t have to worry about IRS penalties and interest. You can also sleep better knowing that no one is going to garnish your wages, seize your assets, or file a lien against your property. Many personal loans come with competitive interest rates and no prepayment penalties.
Using a personal loan to pay your taxes can be an attractive option because, depending on your credit, income, and many other factors, you might be able to obtain a lower interest rate than you would with a credit card. Until relatively recently, personal loans were generally only available through banks and credit unions, but several online lenders have entered the market, making personal loans available through a broader group of lenders. Although the IRS’s interest rate is lower, the non-payment penalty charged by the IRS can really add up. Remember that credit cards and personal loans can also have drawbacks, so be sure to research before deciding which payment method is right for you. Not having enough money to pay your IRS bill, including income taxes, can be a common issue. But a good solution to that problem will be unique depending on your particular financial situation. It may depend on how much you owe, how soon you can gather the money to pay your tax bill, and the interest rate you can get on a credit card or personal loan. The situation with credit cards can change significantly if you can open a credit card with a promotional offer (like a 0% APR intro on purchases) to take advantage of interest-free payments. Regardless of the option you choose, try to plan to have enough money set aside so you’re not short next year.