Can’t Pay Your Taxes In Full? No Problem!
If you cannot pay your taxes in full right now, don’t sweat it. No, this does not mean that the IRS is giving you a freebie this year...you can dream, though! When you require options other than full payment, setting up a payment plan is easy and can be done on the IRS website. Several plan offerings exist, so you can best serve your bank account. Even better news: if this isn’t your first time extending payments, you can wrap all your back taxes into one payment plan.
Short-Term Payment Plans
If you can’t pay in full immediately, you may first qualify for up to 180 days to pay in full. You are eligible for this payment plan if you owe less than $100,000 or less in combined tax, penalties, and interest. This plan comes with no fee, but interest and applicable penalties will continue to accrue until you fully pay what you owe. If you believe you will only need a short extension to pay your taxes in full, we applaud you and encourage you to apply here.
Long-Term Payment Plans
If you’re not going to be able to pay your balance within 180 days, you’re not out of luck. You may qualify for a monthly payment plan, which allows you to make monthly installments over time. To be eligible for these plans, you must owe $50,000 or less in combined tax, penalties, and interest and have already filed all required returns. These payments can come directly from your bank account, as a payroll deduction from your employer, by credit or debit card, or by check. This payment plan comes with a minimum user fee of $31.00. While this is not a make-or-break amount, you may still be able to waive the fee if you are a low-income taxpayer. Every penny counts!
These payment plans require extra paperwork, including the OPA application, Form 9465, and the Installment Agreement Request. These forms and additional information can be found on the IRS website page centered on this topic.
If you believe that the monthly payment amount will still be too much for your wallet to handle and will make it so you cannot keep up with the cost of your basic living expenses, you can prove this to the IRS with additional paperwork. And if times are really tough, you may qualify for hardship status, which can put a hold on collection activity. This doesn’t mean your obligations will disappear; instead, the IRS will have ten years from the due date to collect your money. Remember, though, while your payments are paused, debt will continue to accrue penalties up to the maximum the law allows. Interest will also continue to accrue until your debt is paid off in full. And while this isn’t an ideal scenario, we promise it is much better than ignoring your tax debt!
Finally, if you have enrolled in a payment plan and need to shift how you pay your taxes, you can pay a ten-dollar fee and resume your payments at different intervals.
Please don’t ignore your inability to pay your taxes in full this year, and enroll in a payment plan today by visiting the IRS website and following their directives!
