Federal Income Tax Percentage
You've scraped up enough cash for a tank of gas to get to work and earn your daily bread, but when you go to the grocer the cost of that loaf has gone up, too. What should you do when even bare essentials are a stretch, if through some bizarre twist of economics you still owe federal taxes on April 15th? What you shouldn't do is actually just as important to your family's future financial solvency.
Don’t Pay Taxes with High Interest Credit Cards
Are you thinking of tapping that high limit, high interest credit card you have tucked away just for emergencies? Don't do it. The IRS will work out an installment payment plan. Even with interest and penalties you will probably come out far ahead compared to most credit card fees.
Don’t Cash Out Your IRA
What should you do if your income has changed dramatically for the worse and the idea of even modest monthly payments to Uncle Sam would stretch your resources? Do you have a retirement nest egg stashed in an IRA account that you are thinking of drawing down to keep the taxman at bay? STOP! Don't do it. You could lose almost 50% of your savings to additional taxes and penalties incurred by the IRA distribution. You will pay your standard tax rate, plus a penalty of 10% for a traditional IRA and 25% for a SIMPLE IRA.
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