Paying Off Tax Bill, Penalties, and Interest – How You Can Pay Off Taxes, Penalties and Interest in Affordable Installments

paying off tax bill in installments

Keeping up with your monthly bills such as mortgage or rent, utilities, car payments, etc. can be quite a challenge. Factor in a tax payment on top of all of this, and it can be quite overwhelming. However, you are not alone. There are over 12 million  of US taxpayers  in the same predicament as you. Even though you might feel as though you are in over your head, there are ways to pay off your taxes without having to struggle.

Of course, it’s great when you get money back during tax season. However, this is not always the case, especially if you are self-employed. A great deal of people have to make monthly or quarterly tax payments to the IRS, and some fall behind. It can happen to anyone, but you don’t want to neglect your tax payments or you will incur interest and penalties. The following are some tips on how to keep up with your monthly payments as well as how to successfully get caught up if you do happen to fall behind.

The obvious thing to do is to pay your taxes back in full when they are due. If you happen to receive a bonus at work, an inheritance, or any other large sum of money, you should pay your taxes first to ensure you don’t owe more than expected and start accruing interest and penalties. Clearly, this is not something that happens on a regular basis, but anytime you receive unexpected funds,  you should pay your taxes from it right away to avoid owing more to the IRS in the future.


1.   Find out how much you truly owe

It is imperative that you find out exactly how much you owe. If you notice that the amount of your last notice from the IRS does not match what you think you owe, you need to make sure that everything is in order  on both ends. The IRS is not infallible; they too can make mistakes. It is  important to make sure that they have their numbers correct as well. Situations like lost or misapplied payments do occur, so you need to stay on top of your records at all times. Always keep a copy of your receipts.

If you feel that you are being penalized or fined in error, you can always question it. Also, look back over your tax forms to see if you have filled everything out correctly so there are no mistakes on your end. Incorrect or missing information can lead to additional taxes and fees, so it is crucial to ensure that you have filled everything out properly.

Another thing you should do is compare your current return to previous years. Unless tax laws or your situation have changed drastically, the numbers should be relatively the same. It is always beneficial to check, and double check all of your information. If you still notice a discrepancy, but cannot figure out where it lies, do not hesitate to seek advice from a tax relief expert.


2.   Find out if you qualify for a monthly payment plan

Sometimes, not everyone has enough money to pay their tax bill in full when it comes time to file their annual return, especially if it is a large amount. The IRS will let you apply for a payment plan if you owe $50,000 or less. If you qualify for the installment plan, the IRS will recommend that you pay via direct debit, as this is the most feasible option. This way you won’t miss a payment or worry about your check getting lost in the mail. If you want to apply for an installment plan you must complete the Installment Agreement Request (Form 9465) by mailing in the form or completing it online on the IRS website. To determine if you meet the IRS criteria for a payment plan, be sure to consult with a tax relief professional.


3.   Have an organized system of all communication

You should have a file system in which you keep all forms of communication with the IRS, both written and electronically. Print out all email and online correspondence. Maintain a paper file with all of your paperwork. Also if you have any conversations via telephone, always get the first and last name and employee ID number of the IRS person with whom you spoke. Make notes about the conversation and notate the time and date of the call. It is essential to keep a record of any and all communication should any conflicts, issues or disputes arise. You need to have proof of all agreements to ensure that your rights are protected at all times.


4.   Attempt to minimize penalties and fees

If you owe an extremely large payment, you will incur interest and penalties if you fail to full pay the tax. There are ways to minimize these penalties. First of all, the most obvious way is to make your payment on time. This is the best way to avoid late fees and to keep your interest from accruing. Also, if you don’t think you can pay the entire amount when it is initially due, you can make estimated payments in advance to help lower your payment. And if you are already on a payment plan and are able to pay a bit extra on occasion, it will only help you in the long run since these extra funds will help reduce the amount of accrued penalties and interest.
You can also ask for an abatement of any penalties. The IRS may reduce or even completely waive your  penalties and related interest if you write a letter explaining your extenuating circumstances. These include, but are not limited to, personal or family illness or injury, natural disaster or other traumatic life event, an honest mistake filing your taxes, an unexpected taxable event or other such instance. The key here is to meet the IRS’s criteria for Reasonable Cause.


5.   Attempt to compromise

You can apply for an OIC (offer in compromise) with the IRS if you want to try to settle for less than the full amount owed.  To determine if you qualify for a tax settlement with the IRS, always  check with a tax relief specialist for assistance.

If you still feel burdened by impending tax payments,  penalties and interest rates, you should consult with a tax relief professional for advice. At Landmark Tax Group, we can give you helpful guidance on how to successfully manage your tax payments without worrying about stressful penalties and potential collection action by the IRS. Comprised of former IRS employees, we know the ins and outs of the system.

Not only are we licensed Tax Relief Specialists, we are also former Senior IRS Agents that now serve the best interests of taxpayers like you – all we do is handle IRS Tax Relief matters, all day, every day. Speak to us for FREE at (949) 260-4770.

Call us at (949) 260-4770 or contact us now for a free consultation with our licensed tax relief specialists and ex-IRS Agents. 

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