Are you struggling to pay your taxes and facing the prospect of IRS penalties and interest? One solution available to taxpayers is requesting an installment agreement with the IRS. This arrangement allows you to make monthly payments over a set period of time until your tax debt is fully paid off, helping you avoid the consequences of nonpayment.
If you owe $50,000 or less in combined tax, penalties, and interest, you may be eligible to request an installment agreement. The IRS offers three different types of plans: guaranteed, streamlined, and non-streamlined. The type of plan you qualify for depends on your specific financial situation.
A guaranteed installment agreement is available to taxpayers who owe $10,000 or less. To qualify for this plan, you must have filed all of your tax returns and not have any prior tax debt. This agreement can be set up either online or by phone, and the IRS is required to approve your request.
A streamlined installment agreement is available to taxpayers who owe between $10,000 and $50,000. To qualify for this plan, you must have filed all of your tax returns and agree to pay off your debt within 72 months. The IRS will not ask for a financial statement or proof of income. The agreement can be set up online or by phone, and the IRS typically approves requests within 30 days.
A non-streamlined installment agreement is available to taxpayers who owe more than $50,000 or who cannot pay off their debt within 72 months. This plan requires a financial statement and proof of income, and the IRS may ask for more information to determine your ability to pay. You can apply for a non-streamlined agreement online or by mail, and the approval process can take longer than the other plans.
To request an installment agreement, you will need to fill out IRS Form 9465, Installment Agreement Request, and provide information about your income, expenses, and assets. You will also need to specify the monthly payment amount you can afford to make.
It is important to note that installment agreements come with additional fees and interest charges from the IRS. However, these fees are typically lower than the penalties and interest you would incur for failing to pay your taxes. It is also important to make your payments on time and in full to avoid defaulting on your agreement.
In summary, requesting an installment agreement with the IRS can be a helpful solution if you are struggling to pay your taxes. There are different types of plans available depending on your financial situation, and the approval process can be done online or by phone/mail. If you are unsure if an installment agreement is right for you, consider consulting with a tax professional or financial advisor.