If you’re like most people, every year you wait to hear back from the accountant (or your home tax program) that you’re getting a refund. Even though the tax refund is your money, getting that money back feels a bit like winning a small lottery. There are likely so many expenses vying for your tax refund.
Getting a tax refund is a great situation to be in, but the opposite, owing a tax payment, can really ruin an already tight budget. If you find that you owe a tax refund and don’t have the money, don’t delay filing your tax return or you’ll face a penalty for being late. Instead, try one of these options to generate extra cash:
1. Sell your stuff. If you have a basement or spare bedroom full of stuff, now is the time to sell it. List it on Craigslist or eBay and generate some cash.
2. Ask family for a loan. If you feel comfortable with this option, ask your family members for a short-term loan. You’ll both feel better about the situation if you sign a contract that outlines the terms of repayment. Make sure to stick to the repayment options, too.
3. Take a cash advance from your credit card. This is a more costly option, but it can save you from paying penalties and fees to the IRS.
4. Take a loan from a payday lending company. Payday lending companies sometimes get a bad rap, but they are around for situations just like this. Take a short term loan to pay your tax bill. You can even get a same day loan if you procrastinated and have to file in the next few days.
5. Borrow from a P2P lending company. Peer to peer lending companies like Lending Club or Prosper offer borrowers an option outside the traditional bank loan. This can be another option although the interest rates can be high.
After you find the money to pay your tax bill, take steps to adjust your withholding so you don’t end up owing again next year.