How to save money if you owe the IRS
When filing your tax return, you would prefer to come out ahead and get a refund. But sometimes, taxpayers may owe the IRS a balance due.
Meritrust Credit Union has tips on how to save money in a short period of time to pay that balance.
Meritrust says the earlier you know about your balance due, the longer you have to save. If you file now, you have a little over two months to save and pay the IRS before the April 15 deadline.
"When you do receive that tax refund, I would wait for a couple of weeks before you really do anything with it," said Chris Wolgamott, Director of Financial Education at Meritrust Credit Union. "Make sure that you have a plan in place before you spend it. you're going to have less regrets when the money is gone if you spend it wisely and spend it correctly. So don't just run out and spend it right way make sure that you have a plan for it."
Wolgamott suggests asking yourself if you have enough money to care for your family day-to-day. If you're falling short, put the refund in your savings and divide it by 12 to give yourself an extra paycheck each month.
If you don't have an emergency fund, put your refund toward that. It's good to have a few thousand put aside for expensive emergencies.
Meritrust also suggests using part of your refund to pay back any debt. They say cutting back on extra expenses like entertainment and dining out can help save you money.
If you still can't make it work, talk to a tax professional about your options for delaying the tax payment.