How to Pay Off Your Taxes with a Payment Plan
You’re anxious about how much you’ll owe if you file your taxes. What if it’s way more than you can pay right now? What if it’s more than you were expecting? Don’t panic! You can set up a payment plan to pay off your taxes over time instead of all at once. You can do this for both state and federal taxes, you’ll just need to apply for them separately.
How it works
Apply for a payment plan online or by mail and propose your monthly payment amount. They’ll ask for your SSN, birth date, filing status (married/single/etc.), total tax liability (also called tax debt - this is what you owe), and the amount you can afford to pay every month.
The IRS will either accept the plan or propose an alternative monthly payment amount. If you can’t pay the alternate amount, you can still contact the IRS for more options and they may be able to accommodate smaller payments over a longer period of time.
If you owe less than $10,000, there is no cost for setting up a payment plan with the IRS.
If you owe more than $10,000, there may be a fee for you to set up a payment plan, which generally costs between $31 and $225.
How much should I try to pay monthly?
The IRS charges interest and penalties on unpaid tax debt, including debt that is being paid off through a payment plan. It is in your best interest to pay off your tax debt as soon as possible to avoid additional charges. Plus, you want to avoid multiple years of payment plans stacking up.
What’s different for state payments?
State payment plans vary depending on the state in which you owe taxes. Some states require that you owe a certain amount of tax or have filed all of your past tax returns before you can apply for a payment plan. Search your state website for more information on payment plans. I can help - drop me a line!
Did you know working with a professional can help minimize what you owe? Let’s talk!