Tax season is coming up fast! Whether you file your own taxes or pay someone to do it for you, getting all the paperwork completed in a timely manner is essential. However, with the holidays and busy schedules it can be difficult to make getting your tax return a priority. It can also be tempting to wait until the last minute to submit your return. But can a late tax return negatively affect your credit score? It can, but maybe not in the way you might think.
What happens if you pay your taxes late?
Credit bureaus, or the companies that keep records of your credit score, don’t know if you pay your taxes late or on time. With that said, if you file your taxes very late then the IRS can file a tax lien on you.
A tax lien is an official judgement issued by the government to take your assets to settle your debt. That means that if you owe taxes and don’t pay, the government can issue an order that claims ownership over your future assets to pay your debt.
Not only do tax liens get reported to the credit bureaus, but it can mean disaster for your financial situation. It can take seven years or longer for your credit score to recover from this financial blow.
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How can I avoid tax liens?
Fortunately, it’s very easy to avoid a tax lien. Simply file your tax returns and pay what you owe on time. Sometimes it’s not always easy to come up with the funds you need if you do owe taxes. If that happens, it’s important to contact the IRS and let them know what your situation is. The IRS will work with you to come up with a payment plan or delay collection until you’re able to gather the money you owe. Check out the IRS website for more information on this.
Rebuild your credit after a tax lien
Have you been in a situation where your credit has been damaged by a tax lien? Our team is here to help. Taking out an auto loan is one of the best ways to rebuild your credit. At Coast to Coast Motors you can get the reliable vehicle you need and be on your way to a healthy credit score with easy monthly payments. Contact our team to get approved today!
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