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How Taxes Can Affect Credit

2013/02/10 by editor

You know, call me crazy, but I’m starting to enjoy tax season more and more. Hear me out: for one thing, I’ve never owed the government more than I’ve been owed (knock on wood,) so I’ve almost always gotten a decent sum of money back. For another, the methods for tax filing gets easier by the year. Take last year, for example, when I filed my taxes on–no joke–my SmartPhone. Yep, I used the Turbo Tax app to file from the palm of my hand, and it was the easiest file I’ve ever done. So, not a whole lot of trouble actually buckling down and doing it. And lastly, tax season is for me the perfect time of year to get my financial house in order, if it’s fallen out a bit. I do things like re-evaluate my budget, clean out and shred excess financial documents, and file everything else. Sort of like a “spring cleaning,” if you will. But I know that there are tons of people out there who absolutely dread this time of year. Well, I did find an article that should put some folks’ minds at ease: this MSN Money article explains the unlikelihood of your taxes actually affecting your credit score, which I’ve heard some people worry about. If you’ve ever questioned the correlation between your taxes and your credit report or score, check out this article by Gerri Detweller:

“Tax time can be stressful enough without worrying about whether your tax issues will spill over to your credit reports and affect your scores. The good news is that simply filing an extension or finding that you owe the IRS a chunk of money at tax time shouldn’t affect your credit reports. It’s only when you don’t have the money to pay what you owe that it your credit can be affected.

Here are five ways your yearly payment to Uncle Sam can affect your credit:
1. Going into hock to pay taxes: “

Click here for access to Detweller’s breakdown and explanation of the five ways that taxes could possibly affect your credit.

In a nutshell, you don’t really have much to worry about unless you owe the government a ton of money, can’t pay it, and the loan or debt gets slapped onto your credit report. I do wish you all the best during tax season, and hope that you’ll enjoy a fat return from Uncle Sam!


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