Sometimes, people get hit with tax bills that they cannot
pay all at once. If that ever happens to you, don’t panic. Instead, reach out
to the IRS and ask about an installment agreement, which will give you more
time to pay your taxes.
Of course, with an installment agreement, you will have to
pay penalties and interest, which means that your tax bill will ultimately be
higher. So, don’t use this resource unless you absolutely have to.
If you do ultimately need a payment arrangement, however,
make sure you choose the right type for your needs, as well as a type for which
you are eligible.
One common type of installment agreement is the guaranteed
installment agreement, though not everyone will be eligible for this option.
Eligibility Requirements
The guaranteed installment agreement is a great option for
taxpayers. Under this arrangement, they will not have to worry about a federal
lien being filed against them.
In order to qualify for this agreement, you have to owe less
than $10,000, excluding interest and penalties.
You also must not have had an IRS installment agreement of
any kind in the last five years, and you must have filed and paid your taxes on
time in all of those years.
If you meet these basic requirements, can pay at least the
minimum monthly payment required, and can pay your debt within the next three
years, you should have no problem getting a guaranteed installment agreement.
The Value of Professional Advice
If you’re fortunate enough to qualify for a guaranteed
installment agreement or some other type of arrangement, work hard to avoid
finding yourself in this situation in the future.
Talk to a professional tax advisor about ways to possibly
lower your taxes and what you can do to make paying your taxes on time easier
and more possible.
Getting and staying on track with the IRS will ultimately
make your life a whole lot easier.