Tax season can be stressful, especially if you find yourself unable to pay what you owe to the IRS. However, there’s no need to panic as the IRS provides various avenues for taxpayers facing financial difficulties.
One option available is a self-service, online payment plan, including installment agreements, designed to help individuals pay off outstanding balances over time.
Upon completion of the online application, applicants receive immediate notification of approval status, streamlining the process and eliminating the need for phone calls or written correspondence with the IRS.
Online payment plans come in two forms: short-term and long-term. Short-term plans have a payment period of 120 days or less, suitable for balances under $100,000.
Meanwhile, long-term plans extend beyond 120 days, with monthly payments applicable to balances under $50,000. It’s important to note that a setup fee may apply for long-term plans, contingent on the applicant’s income.
Taxpayers with existing payment plans can also utilize the online platform to make adjustments, such as revising payment dates or amounts, and updating banking information for Direct Debit Installment Agreements.
Managing Tax Debt
For those ineligible for online payment plans, alternative options exist, including submitting Form 9465, Installment Agreement Request, directly to the IRS.
Approval of installment agreements may also incur setup fees, dependent on income levels. However, enrolling in an installment plan can suspend the running of the initial ten-year collection period, providing relief for taxpayers facing financial strain.
Moreover, taxpayers are encouraged to file their returns by the deadline, even if they cannot afford to pay the full amount owed.
Paying as much as possible by the deadline can mitigate penalties and interest accumulation. Budgeting for tax liabilities and exploring payment options, such as short-term extensions or installment agreements, are essential steps in addressing tax debt.
Ultimately, while tax obligations may seem daunting, proactive steps can help manage financial burdens and prevent further complications.
By leveraging available resources and exploring payment alternatives, taxpayers can navigate tax season with greater ease and confidence.