The income tax deadline is rapidly approaching and if you owe money to the IRS, you don't have much time to come up with your balance due. But what can you do if you won't have the money you need to pay off your tax bill? One solution is to sign up for an IRS installment plan. These plans make it possible to pay off your tax balance over time, rather than all at once.
What is an IRS Payment Plan?
How does an IRS payment plan work? This option gives you the ability to decide which day of the month you'd like to submit a payment and how much you'd like to send in per month. While the IRS allows taxpayers to decide how much to pay each month, they must choose an amount that will allow them to pay the balance in full within three years.
How to Request a Payment Plan from the IRS
You've decided you want to set up a payment plan with the IRS, but what do you do next? By completing Form 9465 "Installment Agreement Request" and sending it along with your completed Form 1040 return. When you complete Form 9465, you'll need to enter your full name, mailing address, and Social Security number. You'll also have to the amount you'd like to pay on your balance each month.
Should you decide to submit your tax return electronically, you can complete Form 9465 electronically along with your other forms. If you'll be hiring a tax professional to prepare the forms for you, he or she can fill out Form 9465 on your behalf and help you prepare it for submission.
Taking Care of Large Debts with an IRS Payment Plan
While the vast majority of taxpayers can request a payment plan online or with their e-filed tax returns, some may not be able to do so. For example, if you owe more than $25,000 in tax debt, you'll have to request your installment plan in writing by completing Form 433F in addition to Form 9465 in order to get your request approved by the IRS. As with the smaller debts, you'll have to set up a plan that allows you to pay off your balance in full in no more than three years.
Do you owe a balance to the IRS? Are you expecting to owe a balance on your tax return this year? Consider signing up for an IRS payment plan to care for tax debt. If you do, you'll be able to pay off your account in a manner that doesn't put a crimp in your finances.
