Q. I owe money on my income taxes but don't have the funds to pay it off. What can I do?

A. First, be sure to file your return on time even if you can't make a full payment, says Wendy Burkholder, executive director of the Consumer Credit Counseling Service of Hawaii.

"The worst thing you can do is not file a return," she said. "You'll be hit with a penalty for not filing timely as well as the interest and penalties that are accruing on the tax owed."

She recommends contacting the IRS to set up an installment payment plan. You will be asked to fill out Form 9465.

"The earlier you're dealing with them, the more flexible they're going to be," Burkholder said. You also can check on a personal loan from a bank, or look into paying it off with a credit card that charges a lower interest rate (14 percent or less), she said.

There are penalties and interest on the installment plans, so you are advised to pay as much as you can quickly. A bank loan could be less costly. The installment payments are limited to taxpayers who owe $10,000 or less.

The state, too, noted that credit cards can be used to pay off taxes, though a "convenience fee" is charged.

The state is like the federal government when it comes to working with taxpayers and allows payment through installment plans. You can call 587-1600 or (800) 222-3229 and inform them that you owe taxes and would like to make arrangement to set up a plan.

Sandy Yahiro, department deputy director, said the state is willing to work with taxpayers, depending on the situation. Most installment plans last six months. After the first two months, a one-time penalty of 20 percent is charged because of the delinquency. An interest rate of 8 percent per year (set by statute) also is charged.

Taxpayers requiring longer than six months usually need to come into the office to discuss their financial situation, Yahiro said. A tax lien also may be filed to protect the state's interest if the schedule runs longer than half a year.

Hawai'i's tax collectors work on a case-by-case basis and will work with taxpayers if they are having a difficult time, said Wayne Kinoshita, the department's collections technical coordinator.

But the state will take a "severe" collection action if the taxpayer misses a payment to indulge themselves, such as with a vacation to Las Vegas, he said.

"We've had people pay private school tuition for their kids instead of their tax liability," Kinoshita said.

The last option for taxpayers is an offer and compromise, though these are usually done in extreme circumstances when the taxpayer can't make installment payments. Yahiro said the department will file a tax lien against the taxpayer and put the case on hold until they can afford to pay or the debt is written off.

Burkholder said taxpayers need to review why tax underpayment happened so it doesn't occur again. That includes making sure they correctly list total exemptions used to determine how much tax is withheld from paychecks.

Q. I'm having problems receiving a tax form for my distributions from my IRA account. Every year, I get the same run around at tax time because my account has been transferred several times among insurance companies. What should I do?

A. There are several ways to go at this. One involves making another attempt at resolving the problem with the company. Tim C. Lee of First Financial Planners in Honolulu recommends you dial the office or person with whom you opened the account and demand the problem be resolved.

"There has to be someone there at the office she purchased it from, or ask to speak to a manager," Lee said. You might also consider writing a letter and mention you are thinking about transferring the account to another company if the problem isn't fixed.

Another option involves rolling over the account to a new company. Lee said you will first need to investigate what type of investment vehicle is in the IRA. Some annuities may have surrender charges, and there may be costs for rolling over a back-end loaded mutual fund, he said.

If there are no charges involved, the rollover or transfer should be accomplished easily, he said.

There is also a way to deal with your more immediate problem of a missing 1099-R form, the document that shows tax withheld from IRA, annuity and other retirement plans. The IRS realizes these types of problems occur and suggests people contact the IRS assistance line at (800) 829-1040 to work on a solution.

Do you have a question about personal finance, taxes or other money matters? Reach Akamai Money columnist Greg Wiles at 525-8088 or gwiles@honoluluadvertiser.com