Wednesday, August 26, 2020

IRS Payment Plans


At some point in your life, you may find that you owe the IRS money come tax time. This can often be a big shock, especially for people who are typically used to getting refunds. It can also be a bit harrowing, especially if the money is more than you can afford to pay all at once. 

If you find yourself in this situation, don’t run and hide. After all, you really can’t hide from the IRS, and ignoring them will only make things worse.

Instead, consider entering into an installment agreement with the IRS. This option will allow approved taxpayers to pay off their tax debt a little at a time, instead of all in one lump sum. 



Apply Online

The easiest way to apply for an installment agreement is online, via the IRS’ website. Just make sure you have the following things handy before you start the application process:

l  A valid email address
l  A cellphone number
l  A bank account number
l  Knowledge of your full name and address as it appears on your return
l  Knowledge of your most recent filing status
l  A Social Security number or an Individual Tax ID number
l  Knowledge of your date of birth

Most of this information is used to verify that you are who you say you are and to set up your online account. Once you have this account, applying for an installment agreement is just a matter of clicking a few buttons and providing some general information.

Alternately, if you’d like to do things by mail, you can simply fill out Form 9465, which is the Installment Agreement Request form, and send it to the IRS in the mail. You are also able to call the IRS and set up an installment agreement over the phone.

Fines and Fees

Unfortunately, it’s not free to enter into a payment arrangement. You’ll be charged $31 to set up a direct debit plan online. If you don’t make direct debit payments, you’ll be billed $140 for a new plan or $10 to revise a plan.

If you need to change a direct debit plan, you’ll have to do it over phone, by mail, or in person, and it will cost you $107. To set up a new plan without direct debit, you’ll pay $225. It costs $89 to restructure or reinstate one of these plans. 

Interest also grows as you pay off the tax debt. Thus, whenever possible, pay your tax due in full. Only resort to this option when you absolutely have to.

For taxpayers who really need them, installment agreements are a great thing. However, always be sure to talk with a tax professional about all your options for paying your tax debt.

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