April 15th, the dreaded tax day, is still a ways away but it often sneaks up on people and leaves them scrambling to pay Uncle Sam what they owe. If you are self-employed, you have hopefully been making quarterly estimated tax payments, but even those don’t always protect you from writing a hefty check in the middle of April.
More and more people have been trying to find ways around paying taxes and a recent scam involves using your credit card. The U.S. Government allows you to pay your tax bill using a credit card, but you will be charged a 2% convenience fee. That is, of course, on top of any interest that your credit card company charges you if the balance is not paid in full after a month. With all those extra charges, you might wonder why anyone would choose this option. According to recent news reports, it’s becoming more popular because people think they can then file for bankruptcy and have the tax debt, along with the rest of their credit card bill, erased.
Before you whip out your credit card, charge you massive tax bill and file bankruptcy, there are some things you should know. The Federal Government is wise to these types of scams and the bankruptcy code specifically disallows the portion of your credit card debt that was racked up paying your taxes to be discharged. In laymen’s terms, it means you are still on the hook for your credit card bill related to your tax payment, even if you file bankruptcy.
If a high tax bill and other debts have you struggling to find a way to stay afloat financially, contact Mapes Law Offices for a free consultation. We have been helping people in Grand Rapids, Kalamazoo, and Lansing with difficult financial decisions for years. We can review your financial situation and help you decide on the best course of action. If bankruptcy is the right choice for you, we will help you every step if the way and get you back on the road to financial stability.