Friday, April 14, 2006

Some really bad way to pay off your taxes

Have you ever seen or read this "The IRS does have what it takes to take what you've got." Well, though it's that time to tax crunching, paying your taxes, and its about that deadline time! I love it when people like myself wait for the last second to do there taxes! Why is that...oh well that's an whole nother story!

Let's talk about not getting to caught up into paying your taxe, and make some foolish decision on how to pay them off this year. Though, the IRS can be intimidating and your want to meet that April deadline dont be fooled by doing some rash decisions.

Some really bad ways to pay off your taxes, but the sad thing is people are really doing some of these. But, it's a big no no to step into this kind of debt situation!

1. Pay off the government monthly. Unless you want to just pay them off and dig a big whole for yourself and on top of all that give the IRS complete permission to attach your bank account if you fail to pay. I don't know about you but I don't feel comfortable doing that or would I be even be able to sleep at night!

2. Dig into your retirement account.
Many 401(k) and 403(b) employer-sponsored plans have provisions that allow you to borrow your own money and pay it back to yourself without penalty. The interest rate is usually low. You can't borrow against your IRA, but you can withdraw the money and use it for 60 days without penalty as long as you redeposit it into the same or a new IRA account. If the money doesn't find its way back into an IRA account within the 60-day period, it will be subject to taxes and penalties. You can only use this 60-day provision once a year. The clock starts ticking on the date you receive the distribution. While it's easy to temporarily withdraw some retirement money, most financial experts advise against it unless it's an absolute last resort. Your retirement nest egg should be a safe haven rather than an emergency fund. Bankrate's 401(k) loan calculator can help you figure the cost of raiding your retirement account.

3. Use your home equity.
If you have a home equity line of credit, it will allow you to borrow against it usually by just writing a check. Interest rates on equity accounts are attractive and if you pay what you owe quickly, this debt will cost less than putting the same amount on your credit card. But if interest rates head up, so will equity line rates. And by using this payment method, your home is the collateral for even the relatively small amount you used to pay your tax bill.

4. Take out a personal loan.
The rates on unsecured personal loans can be ugly, but not as ugly as some other fast-cash options. If you happen to have a credit union available to you, try that first because the rate is usually at least 2 percentage points lower.

5. Pay your taxs online using there direct payment. That's just giving them even more...they are asking 2.49% or something crazy like that! Why should you have to pay more when you're already paying them so much. IRS can be frustrating sometimes!

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