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.

2,964 Responses to Which Payment Plan is the Right One for Taxes You Owe?
  1. Cheap Cars
    August 15, 2019 | 7:38 pm

    It is the best time to make some plans for the future and it’s time to be happy. I have read this post and if I could I want to suggest you few interesting things or tips. Perhaps you could write next articles referring to this article. I want to read more things about it!

  2. Read More....
    August 15, 2019 | 8:12 pm

    It’s impressive that you are getting ideas from this piece of writing as well as from our argument made here.

  3. car manufactures
    August 15, 2019 | 8:24 pm

    I have been reading out some of your posts and i can claim clever stuff. I will surely bookmark your blog.

  4. computer monitor
    August 15, 2019 | 8:24 pm

    Excellent blog here! Also your site a lot up very fast! What web host are you using? Can I am getting your associate link in your host? I want my web site loaded up as quickly as yours lol

  5. Education Learning
    August 15, 2019 | 10:41 pm

    Excellent post. I was checking constantly this blog and I am impressed! Extremely useful info particularly the last part 🙂 I care for such information a lot. I was seeking this certain info for a long time. Thank you and best of luck.

  6. Higher Education
    August 15, 2019 | 11:56 pm

    great points altogether, you just received a new reader. What would you suggest about your put up that you just made a few days in the past? Any positive?

  7. Teacher Education
    August 16, 2019 | 12:11 am

    Hello.This article was really remarkable, particularly because I was browsing for thoughts on this issue last week.

  8. Lowest Airfare
    August 16, 2019 | 2:55 am

    Undeniably believe that which you stated. Your favorite justification appeared to be on the net the easiest thing to be aware of. I say to you, I certainly get annoyed while people consider worries that they plainly do not know about. You managed to hit the nail upon the top and defined out the whole thing without having side effect , people can take a signal. Will probably be back to get more. Thanks

  9. Wedding Photography
    August 16, 2019 | 7:08 am

    Thanks a lot for sharing this with all people you really recognise what you’re speaking about! Bookmarked. Kindly additionally talk over with my site =). We can have a link trade arrangement among us!

  10. short hairstyles
    August 16, 2019 | 3:17 pm

    Short hairstyles, and haircuts for women over 50 mustn`t be boring and all alike! If you’ve always wanted to go short, may we just say: The time is now. Nothing says summer like a breeze blowing against your bare neck. https://www.beautiesstudio.com/short-hairstyles/ Explore 20 chic and gorgeous short hairstyles for women over 50—including bobs, lobs, pixie cuts, and bangs…

  11. Catalog Shopping
    August 17, 2019 | 9:01 pm

    hey there and thank you for your information – I have certainly picked up something new from right here. I did however expertise a few technical issues using this site, since I experienced to reload the website lots of times previous to I could get it to load correctly. I had been wondering if your web hosting is OK? Not that I am complaining, but slow loading instances times will often affect your placement in google and can damage your quality score if ads and marketing with Adwords. Anyway I am adding this RSS to my e-mail and can look out for much more of your respective interesting content. Ensure that you update this again soon..

  12. High Fashion
    August 17, 2019 | 9:03 pm

    Unquestionably believe that which you stated. Your favorite reason seemed to be on the net the easiest thing to be aware of. I say to you, I certainly get annoyed while people think about worries that they plainly don’t know about. You managed to hit the nail upon the top and defined out the whole thing without having side-effects , people could take a signal. Will likely be back to get more. Thanks

  13. Financial News
    August 17, 2019 | 9:04 pm

    Wow! This can be one particular of the most beneficial blogs We have ever arrive across on this subject. Basically Wonderful. I’m also an expert in this topic so I can understand your effort.

  14. Dominoqq Online
    August 17, 2019 | 11:57 pm

    Hi! I’ve been reading your blog for some time now and finally got the courage to go ahead and
    give you a shout out from Atascocita Texas! Just wanted to mention keep up the good work!

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