If you have heard the dreaded news that you owe back taxes to the IRS and feel overwhelmed, uncertain of where to turn or even worse – if you can ever pay it off.
There are options available, such as an installment agreement that allows taxpayers to make manageable monthly payments over a set period of time toward settling their tax debt.
If you have heard the dreaded news that you owe back taxes to the IRS and feel overwhelmed, uncertain of where to turn or even worse – if you can ever pay it off.
There are options available, such as an installment agreement that allows taxpayers to make manageable monthly payments over a set period of time toward settling their tax debt.
In this post, we’ll go into greater detail about what an installment agreement is and how they can help you tackle your tax debts by making payments every month until the debt is paid in full.
The IRS offers an installment agreement to taxpayers who owe $50,000 or less in back taxes
If you have trouble paying your back taxes all at once, you can apply for a payment plan through the IRS as an option. This payment plan allows taxpayers to break up their tax debt into reasonable amounts that can be paid back in monthly installments, with interest.
In addition to paying your overdue balance, agreeing to and making regular installment agreement payments will keep you in compliance with the IRS.
Knowing that there is light at the end of the tunnel may make it easier to stay on track and pay off what you owe in a reasonable timetable. (apply for a payment)
To qualify for an installment agreement, you must meet certain requirements
The IRS actually has 5 types of installment agreements that have their own specific criteria for you to qualify.
Each option has its own specific criteria to qualify, based on factors like income, assets, and resources.
Once your application is approved, you will be required to make your first payment within 30 days
Once your application has been approved, you have thirty days from the date of approval to make your first payment. Fortunately, the IRS accepts a variety of payment methods so you can easily find one that works best for you.
You can pay by check, credit or debit card, or direct debit payments. Regardless of how you choose to pay, remember that prompt payments are always beneficial — so don’t wait another day!
Under an installment agreement, you will make monthly payments to the IRS until your debt is paid in full
Nobody enjoys having to pay off debt, and tax debt is no different. Fortunately, the IRS recognizes that payment plans are sometimes necessary. Under an installment agreement, you can make regular monthly payments to the IRS until your debt is paid in full.
This payment plan allows for some wiggle room when budgeting for debt repayment – instead of owing a large sum all at once, it’s a lot more manageable.
How do I pay off my installment plan?
The IRS allows you to pay off your debt in more way than one to adjust to everyone’s unique situation.
First off, you have the option of paying your debt all at once, which is ideal if the amount owed isn’t too much for you to pay at once.
There are also two types of payment plans available. Both are considered direct debit installment agreements, meaning you can send payments directly from a checking or savings account. However, you may choose to pay to choose to pay through a money order or debit/credit card, by check, online, or by phone.
Short-term payment plan
the short-term payment plan allows you to pay off your tax bill in 180 days or less. It is worth noting that only individuals can apply for a short-term payment plan, according to the IRS.
Long-term payment plan
You have two options when opting for a long-term plan, which is the method of paying your debt in monthly installments.
- Direct debit- automatic withdrawals from your checking account.
- Monthly payments from a checking or savings account, online, by phone, or by check.
There is a setup fee for both methods, and it varies depending on your income.
Talk to your tax preparer or call the IRS directly if an installment payment plan may be right for you – after all, setting one up could save you time and money in the long run!
If you default on your payments, the IRS can revoke your installment agreement and take legal action against you
Defaulting on your payments can incur serious penalties and repercussions. That’s why it’s important to understand how to get out of the hole you dug yourself.
This situation is no laughing matter – the best way to proceed is to contact a tax expert as soon as you realize you can’t make your payments. The earlier you reach out for help, the better your chances of avoiding penalties and penalties.
You can apply for an online payment plan through the IRS website
Looking for an easier way to manage tax debt? You’ve come to the right place. The IRS offers several options, such as an online payment plan, and it’s easy to take advantage of these resources.
Applying is a breeze – you can go through their website and take care of everything electronically.
If you can’t pay your taxes at once, don’t worry – the IRS offers monthly payment plans.
Contact us to learn more about payment plans and other options available to help ease the burden. We want to help make paying taxes as painless as possible for you.
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