Which Payment Plan is the Right One for Taxes You Owe?

Almost everyone owes taxes on an annual basis. Maybe you’ve had too many exemptions on your W-4 or you’ve earned contractor income that you didn’t put taxes aside for ahead of time. Whatever the reason, you might owe so much that you can’t pay all your taxes off at once. You could use a credit card to pay off the outstanding amount, but what if you don’t have one? Fortunately, the IRS offers payment plans, known as installment agreements, to help you pay off your debt. Here’s how to find out which one is right for you.

Standard Installment Agreement

Also known as a nondisclosure installment agreement, a standard installment agreement allows those who owe $25,000 or less in taxes to pay their outstanding debt in monthly installments for up to 72 months. This is the most straightforward option for repaying taxes. You don’t have to prove to the IRS that your financial situation is such that you can’t afford to pay your taxes in one lump sum. You also don’t have to reveal that your income goes toward servicing your debts.

Getting this kind of agreement is fairly easy. You fill out Form 9465 detailing why you need to pay off your taxes over time and wait for the IRS to approve payment. You won’t be penalized for nonpayment as long as you have sent this form to the IRS according to its instructions.

Streamlined Installment Agreement

Those who owe more than $25,000 in back taxes won’t qualify for a standard installment agreement. However, they can get into a payment plan under the streamlined installment agreement as long as they can meet certain criteria.

The IRS is testing new criteria under its Fresh Start program, which allows more taxpayers to qualify than would have in the past. Prior to testing, the IRS automatically filed a notice of federal tax lien. Now an IRS assistor can create an installment agreement without filling out a collection information statement or notifying the taxpayer that a tax lien will be filed against him or her. This is to encourage taxpayers to come forward and pay their outstanding tax debts without the threat of punishment.

Offer in Compromise

An offer in compromise (OIC) is a program that lets you pay less than you owe on your taxes. However, it’s not something that is easily obtained, and the IRS has stringent requirements for qualification. However, if you feel you can qualify for the program, you can eliminate your outstanding tax debt permanently. This is something you shouldn’t try on your own because the process is complex. It’s best to get help from a professional who understands the process.

Of course, it’s best if you don’t get into a situation where you owe the IRS money in the first place, but this is not always possible. Take advantage of the installment agreements offered by the IRS to stay out of trouble with the agency and focus on paying your taxes in the following year.

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Which Payment Plan is the Right One for Taxes You Owe?

Almost everyone owes taxes on an annual basis. Maybe you’ve had too many exemptions on your W-4 or you’ve earned contractor income that you didn’t put taxes aside for ahead of time. Whatever the reason, you might owe so much that you can’t pay all your taxes off at once. You could use a credit card to pay off the outstanding amount, but what if you don’t have one? Fortunately, the IRS offers payment plans, known as installment agreements, to help you pay off your debt. Here’s how to find out which one is right for you.

Standard Installment Agreement

Also known as a nondisclosure installment agreement, a standard installment agreement allows those who owe $25,000 or less in taxes to pay their outstanding debt in monthly installments for up to 72 months. This is the most straightforward option for repaying taxes. You don’t have to prove to the IRS that your financial situation is such that you can’t afford to pay your taxes in one lump sum. You also don’t have to reveal that your income goes toward servicing your debts.

Getting this kind of agreement is fairly easy. You fill out Form 9465 detailing why you need to pay off your taxes over time and wait for the IRS to approve payment. You won’t be penalized for nonpayment as long as you have sent this form to the IRS according to its instructions.

Streamlined Installment Agreement

Those who owe more than $25,000 in back taxes won’t qualify for a standard installment agreement. However, they can get into a payment plan under the streamlined installment agreement as long as they can meet certain criteria.

The IRS is testing new criteria under its Fresh Start program, which allows more taxpayers to qualify than would have in the past. Prior to testing, the IRS automatically filed a notice of federal tax lien. Now an IRS assistor can create an installment agreement without filling out a collection information statement or notifying the taxpayer that a tax lien will be filed against him or her. This is to encourage taxpayers to come forward and pay their outstanding tax debts without the threat of punishment.

Offer in Compromise

An offer in compromise (OIC) is a program that lets you pay less than you owe on your taxes. However, it’s not something that is easily obtained, and the IRS has stringent requirements for qualification. However, if you feel you can qualify for the program, you can eliminate your outstanding tax debt permanently. This is something you shouldn’t try on your own because the process is complex. It’s best to get help from a professional who understands the process.

Of course, it’s best if you don’t get into a situation where you owe the IRS money in the first place, but this is not always possible. Take advantage of the installment agreements offered by the IRS to stay out of trouble with the agency and focus on paying your taxes in the following year.

7 Responses to Which Payment Plan is the Right One for Taxes You Owe?
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  2. Like
    February 1, 2019 | 2:11 pm

    Like!! Thank you for publishing this awesome article.

  3. เพิ่มยอดไลค์
    February 2, 2019 | 2:12 pm

    It is in reality a great and useful piece of info. Thanks for sharing. 🙂

  4. ปั้มไลค์
    February 3, 2019 | 2:13 pm

    Perfectly composed articles , thankyou for information. 🙂

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    February 6, 2019 | 2:01 pm

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