3 Tips If You Failed To Pay Self-Employment Taxes

Are you self-employed? Self-employment can be an amazing experience. You get to set your own schedule, do what you love, and potentially make a great deal of money. However, self-employment can also be complicated. One of the most complicating factors is self-employment taxes. You don't have an employer to withhold your income taxes, Social Security, Medicare, and more. It's your responsibility to withhold those and pay them on a quarterly basis.

What happens if you forget to pay your self-employment taxes? The short answer is that you'll have to pay them in the future with interest and hefty penalties tacked on. The good news is you have options available. Below are three tips to take care of overdue self-employment taxes.

Don't ignore the problem.

When you first get the letter from the IRS letting you know that you're behind, your first instinct may be to ignore the problem and hope it goes away. It won't. Once the IRS realizes you are late, they'll continue to pursue the payments. The longer you wait to take care of it, the more interest and penalties will be tacked on to the balance. That means you'll end up owing more money. You can't change the past, but you can take action for the future. The best thing you can do is take action immediately.

Pay as much as you can.

Your balance may be so big that it's overwhelming. If you can't pay the entire balance right away, don't worry. Pay what you can, when you can. The IRS would rather receive something than nothing, and if you are making efforts to pay, they likely won't escalate the issue to more aggressive actions. However, if you don't pay anything, it's possible they could garner your wages, freeze your accounts, and even put a lien on your home or vehicle. At least pay something, even if it's minimal.

Work with the IRS.

One of the best steps you can take is to contact the IRS and talk to one of their agents. They would much rather get you set up on a payment plan than take aggressive collection actions. They will likely work with you to set up a monthly payment to repay the overdue balance. It may take years to pay it off, but that will at least stop the penalties and interest and put a pause on collections. 

You may want to work with a tax planning professional to deal with the overdue balance. They can help you work with the IRS and they can file your self-employment taxes going forward so you don't face this issue again. Contact a tax planning professional in your area if you are having tax problems.