Debt is a sure thing. But, paying undisputed past-due taxes isn’t always easy. Many taxpayers owe money to the IRS but need extended payment terms to make payments.
Unfortunately, paying your taxes on time can be difficult, especially if you’re living on a tight budget. Fortunately, the IRS offers a Tax Installment Agreement for taxpayers to settle their past-due taxes with little hassle.
To learn more about an installment agreement with the IRS, keep reading.
What Is an Income Tax Installment Agreement?
An installment agreement is an agreement between you and the IRS to pay the taxes you owe within a certain period of time. The agreement is made through a collection process called an Offer in Compromise.
An installment agreement can last up to 72 months. The amount you pay each month will be based on your current income and ability to pay, and will include interest and penalties.
What are the Different Options for Paying Taxes?
There are three different types of installment agreements: partial payment installment agreement, guaranteed installment agreement, and streamlined installment agreement.
The taxpayer and the IRS will enter into a partial payment installment agreement if the taxpayer is not able to pay the full amount of taxes owed. A guaranteed installment agreement is available to taxpayers who owe $10,000 or less in taxes. Both partial and guaranteed installment agreements require the taxpayer to pay interest and penalty on unpaid tax.
A streamlined installment agreement is available to taxpayers who owe $50,000 or less in taxes. The taxpayer will not be responsible for paying interest and penalties on the unpaid tax.
Who Can Use a Tax Payment Plan?
There are a few criteria you’ll need to meet to be eligible for an installment agreement. You need to have filed all of your tax returns. You also need to owe less than $50,000 in taxes, and you need to be up to date on your tax payments.
You’ll also need to agree to pay your taxes in full within three years. If you meet all these criteria, you should be able to set up an installment agreement.
How Does a Tax Payment Plan Work?
You can set up an installment agreement online, by phone, or through the mail. But, before you do, check Silvertaxgroup.com to get assistance. To apply online, visit the IRS website and fill out an application.
You’ll need to provide information about your income, assets, and debts. The IRS will use this information to determine how much you can afford to pay each month.
If you owe $50,000 or less, you may be able to set up an automatic installment agreement. With this type of agreement, you’ll make automatic monthly bank payments. You can set up an automatic payment through the IRS website.
If you owe more than $50,000, you’ll need to submit a financial statement to the IRS. This statement will detail your income, expenses, and assets. The IRS will use this information to determine what monthly payments you can afford.
Setup an Installation Agreement With IRS
If you owe taxes and can’t pay in full, you may be able to set up a tax installment agreement with the IRS. An installment agreement lets you make smaller, regular payments over time. You can set up an installment agreement online, by phone, or by mail.
You should contact the IRS to see if you qualify for an installment agreement. To avoid penalties and interest, make sure your payments are on time.
Keep reading our blog to learn more ways to manage your tax debt.