Did Your Taxes Break Your Budget?

Did Your Taxes Break Your Budget?

You’re motoring along, doing your best to pay off debt and actually squirrel away a bit of savings, and then you file your taxes. You owe the Tax Man — and a considerable amount at that.

Owing federal income tax can put your best efforts to save to a screeching halt. In fact, when it comes to large debts owed to the government, it can put the brakes on your budget all together. The only thing worse than owing on your taxes is owing money when you were expecting a refund.

Doing personal taxes

Unfortunately, there’s no way around paying your taxes. Those that attempt to skirt a debt can end up facing serious and expensive consequences. The IRS has something called the failure-to-pay penalty to punish tardy individuals. This penalty adds 0.5–1% of what you owe to your total every month you’re overdue. This is on top of the regular interest, which has held at 4% since the beginning of the calendar year. The IRS will continue to apply this penalty up to 25% of your taxes unless you can prove you didn’t pay because extenuating circumstances (like a death or illness) prevented you from paying on time.

Without these catastrophic life events preventing you from paying your taxes, Tax Day is a hard deadline you can’t ignore. It’s why you’ve wiped out your savings to make sure there’s no chance of getting hit with the failure-to-pay penalty. That’s what your emergency nest egg was there for, after all, but now that this account is empty you’ve come to the stark realization that you no longer have a safety net for the next emergency.

Without savings, a necessary brake line inspection or air conditioner repair could prove too much for your bi-weekly paychecks. The next obvious step is to contact a financial lender for assistance, but it’s not always easy determining which company is for you. When you find yourself just short of making these payments on time, consider speaking with a direct lender of payday loans. Unlike traditional lenders that have lengthy wait times and elaborate conditions limiting their applications, they offer a quick and convenient way to bridge the gap between paychecks.

Prioritizing your business budget
photo credit: slightly everything / Flickr

Though it’s easier to apply for and secure a small dollar loan from these lenders, you should evaluate their rates, terms, and conditions like any other lender. You may have fallen on desperate times, but you still deserve a financially responsible loan. Do your budget a favor and find a state licensed direct lender that offers reasonable rates and terms on all of their financial products. A little bit of time searching these things will help you choose a payday loan that works within your capabilities.

If you’ve had to wipe out your savings in order to cover your IRS bill, open up a new tab in Chrome and start looking. The right direct lender can offer a quick fix for a small financial hiccough. When used properly, they can get you back on the road towards savings and reducing debt, putting your debit with the IRS in your rear window.

SMB Authors

This article is one of the excellent contributions from small business owners, decision makers and professionals.