Tax law requires that individuals file a return for income earned annually, and if a person doesn't complete this process, he or she will owe back taxes. The Internal Revenue Service is not an organization that people want to dodge, which former Nickelodeon Star Drake Bell recently found out the hard way.
Bell - who most recently participated in ABC's diving competition "Splash" - reportedly filed for bankruptcy. It is said that he has debts that total $581,000, which includes back taxes. While the 26-year-old made $408,000 in 2012, that number dropped to just $14,099 in 2013. With expenses totaling $18,771, Bell found himself in financial trouble.
If you owe back taxes like bell, there are several options available:
- Tax bill payments: According to the IRS, people who are unable to pay their full tax bill would be wise to secure a loan to pay in full rather than make installment payments. The IRS will charge late fees and penalties, which could be more expensive than the interest charged on a loan.
- Ask for an extension: Depending on the circumstances, people can ask for additional time to pay their tax bill in full. This can be secured using the Online Payment Agreement application, which can be found at www.irs.gov. However, this option isn't made available to everyone.
- Installment agreement: People who are unable to pay in full, and don't want to take out a loan, can request an installment agreement through the IRS. This means the person who owes back taxes will have to pay the amount due each month or face additional financial penalties.