Owing Uncle Sam a sum of money could be overwhelming. There could be a time when you do not have enough to take care of your tax debts. In this case, you can have a tax payment plan set up for you with the IRS in a bid to take care of your federal tax. You, however, need to be current with your tax to be eligible.
Understanding IRS payment plan
IRS payment plan is an agreement between you and Uncle Sam to settle your tax debt within a given time frame. There is an option of a short term or long term plan, which depends on what you owe. It is, however, not like tax relief programs that reduce the total tax debt.
Types of Payment Plans offered by the IRS
You can have more than one type of arrangement with the IRS. You will be in good hands if you work with a tax pro to help you decide which form of tax arrangement will be best for your situation. Some of the types of plans offered are:
Guaranteed Installment Agreement: For people with tax debts less than $10,000 who have been regular with their tax debt for the past five years, Uncle Sam will readily agree to installment payment. You can estimate your minimum monthly payment value by summing your entire tax debt alongside the interest and penalties and dividing by 36.
Partial Payment Installment: Also known as PPIA, the IRS determines this based on what you can afford, and not the entire amount you owe. Uncle Sam will estimate your monthly installment payment based on your income minus living essentials. Qualifications for this are people with tax debt below $10,000, people without bankruptcies, and limited assets.
Individual Payment Plan: Anyone with a tax debt who does not qualify for a guaranteed installment agreement will have to make do with this plan. People with less than $100,000 in total debt can either take a long or short term payment plan. You can choose to have and not to have automatic withdrawal with the plan.
Short Term Payment plan: The duration for this is 120 days, which could be less. Owing less than $100,000 qualifies you to apply for a short-term repayment plan.
Long Term Payment Plan: This is an installment agreement that exceeds 120 days. This is for people that owe $50,000 or less.
How to set up IRS payments
Here are three steps to take to set up a payment plan to get rid of your tax debts.
Know Your Total Unpaid Tax Debt: To qualify for a payment plan, it is vital to file all your back taxes. With Form 4506-T, you can get access to your tax return info.
Consider Your Options: There are many types of debt relief offered by the IRS with various ways to take care of outstanding taxes. The significant factors determining your payment option are the value of your tax debt alongside your present financial status.
Have all Important Document: Form 9465, an Installment Agreement Request form from the IRS is compulsory if you owe individual income tax. Owing more than $50,000 disqualifies you from filing Form 9465 online; instead, you should fill Form 433-F, a Collection Information Statement. For people who feel they merit the status of the low-income taxpayer, Form 13644 - Application for Reduced User Fee for Installment Agreements should be engaged. With form 2848, you can engage the power of Attorney.
Complete the Payment Plan Application: There are various means of applying for payment plans: online, via mail, over the phone, or by walking over to the IRS office.
If you are applying for a payment plan, you must submit the following:
Your name as it appeared on the most recent tax form
Your email ad
Personal address as it appeared on the most recent return
Date of birth
Filing status
The individual Tax ID or Social Security Number
It is also essential for applicants to submit a financial account detail and mobile number to confirm their identity.
It is vital to keep up with payments in a responsible way. Failure to honor it might make the IRS cancel the payment agreement and classify you as default for no payment. With this, it is a good idea to mail your check at least a week before the due date.
FOR MORE INFORMATION OR TO MAKE AN APPOINTMENT WITH Flynn Financial Group, INC, PLEASE CLICK THE BLUE TAB ON THIS PAGE.
THANKS FOR VISITING.
