Every year, many people in America don’t have enough cash in their bank accounts to pay for the tax when it comes to the time for them to make payment for their tax. The IRS can impose a number of penalties on you if you fail to make payment for the tax on time including putting liens on your house, and wage garnishment.
You can also get hit with several types of penalty fees by the IRS. You can get charged with a failure to pay penalty that cannot exceed 25% of the unpaid tax. If you did not file for your tax on time, you will get hit with a failure to file penalty which is about 5% of the unpaid tax. If you delay in paying your tax for a long period of time, the IRS can freeze your bank account.
Personal loans offer at leas one good solution if you are nearing to the due date of the tax bill and you know you won’t be able to come up with enough funds to pay it. After you settle your tax with the personal loan, the IRS will remove the tax liens. Removing the tax liens can prevent your credit scores from dropping. Personal loans offer much better terms than credit cards. First of all, it has a lower interest fee compared to credit card payment. Unlike credit cards, it has a fixed loan term so you know when you will finish paying the amount you owe.
Credit cards will allow you to push the balance from month to month so you never know when you are going to finish paying your bill. It is not advised that you borrow against your retirement account as you can get charged with a high tax penalty. Borrowing against home equity is risky as you can lose your home if you fail to pay back on time.
The application process of the personal loans involved submitting a few financial documents. Many personal loans can be approved fairly fast within a week or so if the application is carried out line. With a personal loan, you can borrow up to $100,000 for tax payment. The monthly payment is usually fixed so you should be able to afford it.
If you have decided to use personal loans to pay your tax, you should not delay and quickly apply for it to avoid penalties on the tax debt. Doing so can relieve you from the worries that you won’t be able to pay your tax bill on time. The advantage of using a personal loan to pay for the tax is that you can build up your credit score. Your credit score will slowly increase when you promptly pay for the monthly payment for the personal loan.