I owe money on my taxes. What can I do?

I found out I owe money on my income taxes. I’m not sure if I can pay it all at once. What can I do?

—Anonymous

FPAC responds:

Tax season is over and many do get excited when anticipating a big tax return. But if you owe money, on the other hand, you might feel a little defeated—or downright worried. But don’t fret, you have plenty of options, regardless of your unique financial situation.

What to do if you owe money on your taxes

Scenario 1: If you have money to pay your taxes on hand

If you owe money to the government and you have that amount already set aside, or an?emergency fund?you can dip into, you simply need to pay the amount and settle up. You’ll make your payment to the?Canada Revenue Agency?(CRA). These days, there are plenty of convenient payment options available to you—and old school ones, too. Here’s how to pay:

• MyCRA account:?You can pay online with your?MyCRA?account. Just login and click on the Make Payment button.?
• Online banking:?You can pay online. Simply make the CRA a payee on your bills list with your financial institution of choice. Your Social Insurance Number (SIN) will be the account number with the CRA.?
• In person:?If you’re headed to the bank to pay, be sure to have your Notice of Assessment or SIN number on hand.
• By mail:??If you want to pay by mail, you can do so once you receive your?Notice of Assessment?(NOA). You can make a payment to the CRA with a cheque from your Canadian bank account. Make the cheque payable to the Receiver General for Canada. Include your remittance voucher that comes with your NOA and mail it to the address on the back of your voucher.

Scenario 2: If you don’t have the money to pay your taxes in full

First things first: don’t panic. This situation is very common. If you can’t pay the full amount that you owe, the CRA can help you set up a payment arrangement.?

Before you call the CRA to set this up, be sure to calculate your monthly income and expenses to determine what you can afford to pay the CRA each month. The CRA offers the?Payment Arrangement Calculator. Once you know your numbers, call 1-866-256-1147 to get started. And if your financial circumstances happen to change over the course of your payment plan, you can call again to adjust the payment plan.

To find out “what not to” read the full article on moneysense.ca.