Welcome to Professor Savings.com
We teach finance basics. Hi, I’m you’re host today Rayfil Wong.
Todays topic, how to deal with a surprise tax bill?
Oh crap! It can happen to the best of us.
First, relax and eat a cupcake. Then start filing your tax return and pay any amount you can.
There can be a penalty charge that can increase your bill.
Second, consult a tax professional and inform them about your situation.
They are professionals and understand the situation.
They can likely help you write a letter of appeal with the proper tax language.
As for paying the tax bill, in another Professor Savings video we spoke about creating an emergency fund.
This is a good time to use it. Some people pay their tax bill with their
credit card, but warning make sure you know the interest rate (APR) of the credit card.
Also, consider selling any other investments such as bonds or stocks to pay for the IRS tax bill which can have high interest penalties.
So do your math and figure out the best option.
Another great strategy is to call the IRS and talk to them about payment options.
The most important thing is to react to the situation as oppose to not doing anything at all
again, consult a tax professionals for more advice.
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Professor Savings signing off.