Losing Sleep Over Your Tax Debt?
Have No Fear, IRS Payment Plans Are Here!
With tax season in full swing, it’s a stressful time of year. If you used our last newsletter to determine how much tax you owe and find you are short, you have options that may make tax season a little less stressful — as long as you’re realistic with your approach.
A licensed IRS representative can help you establish a fair and reasonable payment plan. There are a couple of different ways to set this up, but they all depend on filing your taxes on time.
During your filing, you can submit an installment agreement request by mail, phone, or online. From there, the IRS will review your request and your tax account to see if you qualify. If you owe $10,000 or less, you’re much more likely to get a payment plan that suits your needs.
If you’re not sure about your eligibility, there are a few other key factors you need to be aware of.
You are required to pay off your debt within a strict time frame set by the IRS. Otherwise, you’re responsible for penalties and fees. If you do get approved for an installment plan that lasts several years, you’re required to adequately file and pay all subsequent tax returns during that time.
Eligibility also depends on your previous history. As long as you have not failed to file your returns during the last five (5) years and have not entered into an IRS payment plan during that time, you are still eligible.
In situations of debt larger than $25,000, the IRS may require you to submit a financial package to evaluate your income, expenses and assets. If your business has a debt larger than $10,000, it’s almost guaranteed you will need a financial package.
This allows the IRS to thoroughly investigate your finances and verify your need for a payment plan. But, like any other debt, you’ll have to pay interest while you’re on the program.
Applying for payment plans can be tricky and stressful to navigate. If you find yourself in need of one, reach out any time.
~ Michael Raanan MBA, EA, Former IRS Agent