How to Set Up an IRS Payment Plan

Setting up a payment plan to pay back the IRS is the easiest way to deal with your tax debt. It's flexible, too. You can set a lot of the terms so that you are really in control of your payment plan. You may want to consult a tax professional when setting up your payment plan, especially if you don't have prior experience dealing with the IRS. A payment plan is easy to set up, but you certainly want to avoid mistakes that could cost you time and potential late fees. Before proceeding, make sure that your tax filings are current. You need to file all unfiled returns before creating a payment plan.

To begin, you need a copy of your tax return and the full amount that you owe to the IRS. There are a couple of rules that you need to be aware of. First, your total tax debt must be less than $10,000. Also, you must be able to pay off your debt completely within three years. You or your tax professional must crunch the numbers and see find out the minimum monthly payment needed to fulfill those terms. Then take a look at your budget and make sure that you can afford that amount. If you can't, you'll need to talk to your tax professional and choose another method for dealing with your tax debt.

Creating Your Payment Plan

Once you're sure that you can comply with the payment plan guidelines, take some time to decide the details. Decide how much you want to pay each month, and for how long. The IRS also allows you to choose the day of the month that your payment will be due, from the first to the twenty-eighth. This is especially handy if, for example, you pay your rent each month on the first and you're worried about shelling out both payments at the same time, you can choose to pay the IRS on the fifteenth to space things out. Once you have the details down, you will need top fill out Form 9465, which you can get from your tax professional, or from calling the IRS directly. If you meet all of the required criteria, the IRS will approve your payment plan within thirty days.

Making Payments

Another great thing about IRS payment plans is the flexibility of payment. The IRS has really kept up with technology, and they allow you to pay your monthly payment a variety of ways. Obviously, you can mail in a check or money order, but you may fear that your payment will be late or that your payment might get lost. This is a valid concern, because missing a payment, or even a payment that arrives late, can cause the IRS to cancel your payment plan! The great thing is that the IRS allows you to have payments withdrawn automatically from your bank account each month. If you can, it's a good idea to choose this plan. You'll never have a late payment, and you can always be sure that the IRS gets your money.

Once you set up your IRS payment plan, you'll feel a lot less stress and pressure. Begin the process as soon as possible, and you'll stop the late fees from mounting. Taking care of your tax debt is usually quick and easy, especially if you have a tax professional, such as a certified public account or tax attorney, to do most of the work for you!

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