Unexpected taxes may arise for many reasons, and if you don’t have the money on hand to pay them off, you can find yourself in a sticky situation. On top of that, one can be left with hefty penalties arising from not paying on time.
Some situations in which unforeseen sources of tax liabilities can arise from are:
1. Prize Winnings: It is a given that cash winnings from the casino or the lottery can be taxed, but did you know that awards and in-kind prizes are also taxable? The IRS requires you to report in-kind winnings on your tax return for their fair market value. The unfortunate effect of this is that you may be forced to sell the prize you’ve won just to pay off the tax you owe for it.
2. Life Insurance Policies: Most beneficiaries of life insurance policies do not have to pay taxes for the benefits they receive. But there are some cases wherein your benefits can be subject to tax—if you choose to transfer your policy for a valuable consideration, if you indicated no beneficiary in the policy, or if you make a gift of it to a third party.
3. Missed or Late Filed Tax Return: If you < fail to file your tax return or ask for an extension on time, the IRS will charge you 5% a month as a failure-to-file penalty, on top of the taxes that you already owe them. In addition, you may be assessed a hefty failure to file penalty to boot!
In California,unsecured personal loans are a convenient means of paying off your tax bills and avoiding costly interest and penalties. You also won’t have to worry about being charged with tax evasion, which can authorize the government to garnish your wages, freeze your bank accounts, or place liens on assets you own.