How To Pay Past and Current Taxes - A Guide For Business Owners and Creatives
Hi Friends! If you owe back taxes and want to keep up with current taxes, join me as I introduce you to the system I used to pay both simultaneously. (If you prefer to watch the video, please check it out here…)
Hi, my name is Lucas and welcome! A couple of years a go I was in a tough spot. I owed 2 years worth of back taxes and really didn't want to fall behind on a third year. So, I took a long hard look at what I was doing and came up with a simple plan to get current.
I know how much it sucks to owe money, especially the tax man so let’s get you free.
Step 1: Relieve The Pressure and Give Yourself Some Breathing Room
Chances are, you’re feeling a bit of pressure, Kind of like a time bomb ticking in the background. So let’s start by diffusing the bomb and releasing some of that pressure.
What exactly do I mean? In the US, the tax agency allows us to make payments on back taxes so,
The first thing to do is set up a payment plan.
It’ll alleviate some of the pressure and give you some breathing room. You can do it over the phone, snail mail or on their website and surprisingly, the process is quite simple.
Before you set that up, let’s talk about timing and amounts… I was recently working with a client who owes about $90k. Understandably he’d like to pay it off as fast as possible, So, he was planning to set up massive payments.
Before it was finalized, we talked and I reflected back to him what he was about to do… By committing himself to huge payments on a short time line, he was applying unnecessary pressure to himself.
I suggested he chose the longest repayment plan they offered AND pick the lowest monthly payment they would accept. This gave him a tremendous amount of breathing room And because he was feeling a lot less pressure, he knew that he could easily make additional payments as often as he’d like.
So, set up a payment plan, choose the longest one offered and the lowest monthly amount they will accept and when it makes the most sense for you, make extra payments.
Step 2: Implement A Simple Plan
Now that you have a little room to breathe, it’s time to implement a simple plan. Every single time you receive money, transfer a percentage to your tax account. Make it a habit. If you don’t have a tax account or a good system to set aside money, check out this video.
Personally, I chose to put the majority of my money towards getting rid of the back taxes and paid the bare minimum on the current ones.
Once I paid off the back taxes, I huge weight was lifted and I was even more motivated to catch up on current taxes.
Feel free to do the same or experiment to see what works best for.
Step 3: Focus Your Time, Energy & Money Towards Freeing Yourself From Your Tax Burden
I think we can agree that steps 1 and 2 are pretty straightforward. So why is paying taxes so hard to do when the plan is pretty simple? In my experience, it comes down to what we have going on inside (our thoughts and fears about the tax man).
I chose to put off my taxes for years. I was 38, owed a lot of money and was feeling a lot of shame that i didn’t want to face. It’s the same with most of my clients. We avoid those feelings as long as possible.
When I received threatening letters from the tax man, I realized that I was going to have to make a change and take immediate action - being forced to face my fears was just the thing I needed because once I made my taxes a priority, paying them off was pretty easy.
If you’re ready to face your situation and take action, I think you’ll be pleasantly surprised at how good it feels and how simple it is to do. I invite you to cut back on your living and business expenses temporarily and divert the extra funds towards your taxes.
When extra money comes in, put it towards getting caught up and if there is no extra money, let’s hop on a free call. I’ll help you identify where you’re wasting money and show you how to plug those financial leaks and capture the extra income so you can pay off your taxes faster and start saving all of that money for something you don’t want in your life.
Now, let’s recap the lesson and get you on your way.
Step 1: Give yourself some breathing room by Setting up a payment plan
Step 2: Every time you receive money, send a percentage towards paying your taxes
Step 3: Make it your new mission in life, temporarily, to free yourself from your debt
And if you’d like to learn 3 ways to pay less taxes, check out this video.
Today’s lesson is a tiny fraction of what I share in the Big Split program so if you’d like to transform your finances in 1 week, click here to schedule a free 60 minute call with me.
Thank you for your time and energy. I’ll see you in the next one.
Lucas Z.