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Selecting the Right Type of IRS Payment Plan or Installment AgreementIf you owe the IRS taxes or you foresee you will, and you cannot pay in full, you may want to request an IRS payment plan or Installment Agreement from the IRS. Get a better understanding below of what payment plan is best for you based on your debt amount as well as how to request it. One of the ways that you can pay IRS taxes you owe is through a
payment plan. This is a great option if you cannot pay all of your
taxes as once because you can pay the IRS back over a series of
manageable, monthly payments. You should know that there are many tax payment plans with each being most appropriate for your debt amount. Realize, with an IRS payment plan, you do
end up paying more than your total balance because of interest and the failure to pay penalty. That
being said, the benefit is that you can get back into compliance with
the IRS and cut the failure to pay penalty by 50 percent! The first type of IRS payment plan is known as a Guaranteed Installment Agreement. This type of plan is "guaranteed" to you under the tax code as long as you owe less than $10k (excluding penalties and interest). In most cases, you can file for a guaranteed installment agreement on your own. To do so, follow these steps: 1. File your taxes, including returns that you may have missed in the past. 2. Use Form 9465 or the Online Payment Agreement offered by
the IRS. Make sure you estimate a reasonable monthly payment because you are
only granted 36 months to pay back your balance. To estimate the minimum monthly payment, take your total tax debt and divide it by 30 (for 30 months). 3. For your first payment make sure you include the $105 for non direct debit or $52 for direct debit from a checking account. 4. Mail your form and tax return to the IRS. 5. Within 45 days you should receive an acceptance letter from the IRS. The other type of IRS payment plan is a streamlined installment agreement. It is given this name because it does not require financial
verification. With this type of payment plan you are given up to 60 months to
pay back $25k or less in taxes owed. Follow the steps for the Guaranteed Installment Agreement except to figure out your minimum monthly payment divide your total tax debt by 50 months. If you owe more than $25k you are going to look to apply for a Verified Financial Installment Agreement (VFIA). With this, the IRS will verify your financial situation before allowing you to move forward. With a VFIA it is best to hire a tax professional because you will need to complete a Collection Information Statement (Form 433-F or 433-A). With many options Article Tags: Payment Plan, Installment Agreement Source: Free Articles from ArticlesFactory.com
ABOUT THE AUTHORMatt Robinson is a tax professional and writer for TaxDebtHelp.com, which is a firm that provides not only self-help information for Federal and State taxpayers facing major problems but also professional services.
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