What Are my Options If I Owe the IRS
For taxpayers that have a balance with the IRS, there are various options for payment. The following tips will help you clear your account with the IRS as soon as possible.
- 1) If you get a bill for late payment of taxes, its best to pay promptly. Often, it's in your best interest to get a loan to pay the bill in full instead of making installment payments to the IRS.
- 2) The IRS accepts credit cards. The interest rate on your credit card or bank loan may be lower than the combination of interest and penalties charged by the IRS. Contact one of the following companies to process your payment with a credit card: www.pay1040.com, www.officialpayments.com/fed, www.payUSAtax.com
- 3) Electronic funds transfers, checks, money orders, cashier's checks or cash are accepted by the IRS. To pay your tax bill with an EFT you may call 800-555-4477 or online at www.eftps.gov
- 4) Monthly installment agreements may be requested if you are unable to pay the tax bill in full. You must file all the income tax returns that are required and be current with estimated tax payments.
- 5) If your tax bill is $25,000 or less in combined tax, penalties and interest, an installment agreement may be requested by using the Online Payment Agreement application at www.irs.gov
- 6) Mailing IRS Form 9465 - Installment Agreement Request - with a copy of your tax bill is another way to make arrangements to pay monthly. If you owe $25,000 or less, state the highest monthly amount you can pay on the form. The IRS needs about 30 days to process the request. A reply letter will be sent informing you of approval, denial or requesting additional information.
- 7) If you owe more than $25,000, IRS Form 433F - Collection Information Statement - is required to be submitted before an installment agreement will be considered by the IRS.
- 8) If the IRS approves a monthly installment agreement, a one-time user fee will be charged. The user fee, ranging from $43 to $105 will be deducted directly from your bank account.
- 9) One step to take to avoid owing tax with your income tax return is visit www.irs.gov and use the withholding tax calculator tool. Complete a Form W-4 to change your level of withholding to insure you are paying enough income tax throughout the year.
IRS Publications 594 and 966 have more information about installment agreements and payment options.
Please contact us to help you determine which option best suits your personal needs.