How To Pay Back The IRS With Payment Plans and Installment Agreements
If you’re not able to pay the taxes you owe by the due date, the balance is subject to interest and a monthly late payment penalty. By law, the IRS may assess penalties to taxpayers for failing to pay taxes they owe by the deadline.
People tend to forget that there’s also penalty for failure to file a tax return, so you should file in a timely manner even if you can’t pay your balance in full.
If you can’t afford to pay your taxes and you’re not sure what your next move should be, fear not, there is a way out of that tight situation. You may be able to qualify for an installment plan with the IRS. An installment plan allows you to pay your taxes over time while avoiding garnishments, levies or other collection actions. The minimum monthly payment for your plan depends on how much you owe.
Minimum monthly payment
The most logical and beneficial option available for struggling taxpayers are installent plans. You can apply for an installment agreement online, over the phone, or via IRS forms. To some degree, you get to choose how much you want to pay every month and how much is yours worth? The IRS will work with you to find out what you can afford to pay per month, encouraging you to pay as much as possible to reduce your interest and penalties.
If you select too low of an amount, or let the IRS pick a payment amount for you, your minimum payment will be the amount that you owe divided by 72.
If you can pay off your balance within 120 days, it won’t cost you anything to set up an installment plan. Otherwise, you’ll owe about $52 for setting up a direct debit agreement with the IRS, or $105 for a standard or payroll deduction agreement. If you’re a lower-income taxpayer, you may be able to reduce that fee to $43.
If you owe less than $10,000 to the IRS, your installment plan will generally be automatically approved. Under this type of plan, as long as you pledge to pay off your balance within three years, there is no specific minimum payment required or setup fees. For balances above $10,000, you may have to provide additional information in order to qualify.
With a balance due above $10,000, you can qualify for a streamlined installment plan. While acceptance isn’t guaranteed, the IRS doesn’t usually require additional financial information to approve these plans. With a streamlined plan, you have 72 months to pay. However, a minimum payment does kick in, equal to your balance due divided by the 72-month maximum period.
If you owe more than $50,000, the IRS will conduct a more thorough review of your finances. On Form 433-A, you’ll have to provide detailed information on your investments, assets, income and bank accounts. If you have any valuable assets, you might have to sell some to pay down your outstanding balance. Your minimum payment in this situation will be unique to the specific agreement you strike with the IRS.
Let Success Tax Relief Help You Find A Way Out
If you need help with IRS debt or you need someone to negotiate on your behalf, Success Tax Relief has a team of expert consultants who can help you resolve your IRS Tax problems quickly and efficiently. Don’t wait until the final notice from the IRS to seek out professional help. Contact us and take control of your tax debt today.