The question isn't flip.
A new Fresh Start program introduced by the Internal Revenue Service this tax season would allow a break for a group of struggling taxpayers who lost jobs or saw a sizable drop in self-employment income.
The program is an attractive six-months-to-pay option. But you would have to be able to pay it off in that time.
"If you can't pay now and you're unemployed, what's going to change in the next six months?" asked Barbara Weltman, contributing editor for J.K. Lasser's "Your Income Tax 2012."
Then again, maybe something has changed. Maybe, you've already landed a pretty good job. If you owe money, you need to review those options and decide what you can pay and when.
To qualify for the new Fresh Start, taxpayers must file those returns by April 17, and you would need to include a Form 1127-A.
"The more opportunities there are for relief, the better it is," Weltman said.
Under the program, jobless taxpayers could file their return, include a Form 1127-A but wait until Oct. 15 to pay and avoid a costly failure-to-pay penalty if they follow some specific rules.
Interest would still apply, but it's that failure-to-pay penalty that really builds up and destroys you.
Who could qualify? Someone who had a job but has been unemployed for at least 30 consecutive days during 2011 or 30 consecutive days this year.
The Fresh Start program also works for a self-employed person who lost 25 percent or more in business income in 2011 because of the economy.
This is not a break, though, for the very well-off.
To qualify, a taxpayer's adjusted gross income cannot exceed $200,000 if married filing jointly or $100,000 if single, head of household, married filing separately or qualifying widow or widower.
Pay attention here: The 2011 balance due cannot exceed $50,000, either.
The amount can you save depends on how much you owe.
The failure-to-pay penalty is half of 1 percent each month until it hits 25 percent.
So in six months, the penalty would be 3 percent. For example, if you owe $15,000 or so, you're looking at saving roughly $450 in penalties.
But again, you must be able to pay this by Oct. 15 under that Fresh Start plan.
See IRS.gov for Form 1127-A to request 2011 penalty relief. You must make that request by April 17 when you file the tax return -- and file that Form 1127-A.
You can call 800-829-3676 to request forms.
But you do need to be able to pay in six months because you're basically back at square one if you file for a Fresh Start with Form 1127-A but do not pay by Oct. 15.
If you don't pay in full by Oct. 15, then you're looking at all those penalties on the unpaid balance, plus interest, going back to April 17.
If you don't pay, that so-called Fresh Start would end up a real stinker. If you know you cannot pay in six months, look into other options, such as an installment plan.
Taxpayers can get an installment agreement instead of this special six-month waiver.
The IRS does not require you to supply a financial statement to get an installment agreement if your tax liability is $25,000 or less.
An automatic installment agreement now would be granted if you owe up to $50,000. The old limit was $25,000.
Plus you would have 72 months to pay, instead of the old 60 months.
Interest won't be waived, and you would pay some penalties.
If you owe between $25,001 and $50,000, you would have to submit a basic financial statement on Form 433-A or Form 433-F to qualify.
If you owe more than $50,000, the IRS notes that taxpayers have an option to pay down their balance due to $50,000 or less to take advantage of an installment payment option.
Taxpayers do have an option of paying taxes via their credit cards, too, but it is a costly way to go.
You would pay a convenience fee on top of any interest charged on your credit card. The fee varies by the service provider listed at IRS.gov.
If you charge $5,000 on a credit card to pay a federal income tax bill, for example, the fee would range from $94.50 to $117.50, depending on the service provider.
Be sure to run your numbers through the fee calculator. And remember, you would pay the credit card's interest rate on top of that, too.
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