Even after a rough 2020, a lot of us are going to owe the IRS money this year. Depending on your situation, you may owe a lot. The final amount may be intimidating, but there are options. Also, you don’t have to pay everything at once. The IRS has installment options when you owe a large amount of money.
Qualifications
You have two options if you need to pay your taxes in installments. You can apply for a long-term or short-term payment plan, depending on how much money you owe. Long term, interestingly enough, has a smaller cut-off than short-term. This is likely because the government assumes that those who owe vast sums of money are more capable of covering the bill. To set-up a long-term payment plan without providing the IRS any financials, you must owe $50,000 or less, and for a short-term plan, you must owe less than $100,000.
What Does it Cost?
To pay off everything at once, it costs nothing. You can send the IRS a check or use their DirectPay system, where the money is taken directly from your account. The same is true for short-term payment plans. However, payment plans do come with penalty fees and interest. If you classify as a low-income household, you can set up a long-term payment plan for free, still with penalties and interest. All other citizens who opt for long-term payments will be charged a one-time, set-up fee. The set-up fee varies in amount based upon how the agreement is set-up (i.e., online or over the phone) and how the agreement is going to be paid (i.e., direct debit or check or money order). Setting up a long-term agreement is cheapest when done online and agreeing to direct debit payments. Interest and penalties, again, apply. In all payment options, the IRS charges a fee when paying via debit card.
Review or Revising a Payment Plan
If you need to make alterations, such as changing the monthly amount or the method of payment, the IRS has an online tool you can use. You may also need to reinstate your monthly payments if you are unable to meet them, defaulting on those payments.
When to Talk to a Lawyer
Hopefully, you’ll be able to budget out the appropriate timeline for paying back the IRS. When it looks like you won’t be able to meet their demands, you could be facing legal trouble. That’s when it’s time to talk to an experienced lawyer. They can work with the IRS to help keep you out of harm’s way. Lawyers know the intricacies of tax law, all of its various exceptions and exclusions, and they can use those laws to defend you.
If you’re having difficulty paying back the IRS, give us a call. We have years of experience helping taxpayers get out of trouble with the IRS. Our number is (321) 320-6088, and you can contact us online. Consultations are free.