Owe Money on Your 2022 Taxes? How to Come Up With It in a Pinch
- If you underpaid your taxes in 2021, you'll need to pay the IRS that balance by April 18.
- If you don't have that money sitting in savings, here are some options.
Here's how to scrounge up cash for the IRS.
Tax season is now well underway, and a lot of people are tackling their returns well ahead of the April 18 filing deadline in an effort to get their refunds sooner. But what if you've crunched the numbers and aren't getting a refund, but rather, owe the IRS a chunk of cash?
It's a situation you might be in this year for a number of reasons. Maybe you did a lot of side hustle work in 2021 that you never paid taxes on, and now you're sitting on a bill. Or it could be that you sold investments at a profit and owe the IRS money for that reason.
No matter why you have an underpayment on your hands, your 2021 tax bill is due by April 18. If you don't pay it on time, you'll be assessed penalties and interest for being late. If you don't have enough cash in your savings account to cover the bill, here are some options for accumulating it quickly.
1. Work a side job temporarily
There's a lot of gig work you can pick up on top of your main job. If you're hoping to round up enough cash to pay the IRS in about two months' time, plugging away at a side hustle could be the solution. Remember, that side gig isn't something you'll need to maintain forever -- you'll just need to stick with it to boost your cash reserves in the near term.
Take a look at what you owe the IRS and then map out different side hustle strategies. If you need to come up with $800 and have about eight weeks to do so, you may want to focus on side gigs that are likely to pay you $100 a week.
2. Cut back on spending in a meaningful way
If you normally manage to pay your bills in full every month without having to carry a balance on your credit cards, then there's nothing wrong with treating yourself to things like store-bought coffee, takeout, and a host of streaming services for those nights and weekends when you'd rather not leave the house. But if you now owe the IRS money, you may need to cut back on those things temporarily.
Say you normally spend $50 a week on takeout, coffee, and a streaming service. If you owe the IRS $800, eliminating those expenses could allow you to come up with half of your tax bill by mid-April.
3. Sell items you don't need
Your home may be loaded with items you no longer need or use, but somebody else might want. Take inventory and make a list of items you can sell for a decent amount of cash. Then, find the best way to sell those items.
If you have electronics that aren't too cumbersome or costly to ship (like an old cell phone), you could use sites like eBay to find a buyer. If you have bulkier items to unload, like furniture, try advertising on your town's social media page or local marketplace groups. If you're able to get enough cash for the items you're selling, it could make a huge dent in your IRS bill -- if not cover it entirely.
Owing the IRS money is never fun. If that's the situation you're in, you still have time to come up with a plan to accumulate that cash. That said, if you don't manage to accrue that money by April 18, don't panic. The IRS will generally let you get on an installment plan to pay off your tax debt over time. There can be some fees involved and you'll be charged interest and penalties until your balance is fully paid off. But you won't have to worry about the IRS garnishing your wages to get the money it's owed.
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