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If you owe the IRS money, the April 15th deadline is fast approaching.
It's important to note that even if you get an extension to file your taxes, you still need to pay the taxes owed by the deadline or else you'll get charged interest on any unpaid amounts.
For those unable to pay the IRS in one lump sum, however, there are a few types of installment plans offered. Here's a general overview:
Under this installment plan, the IRS will not file a federal tax lien against the taxpayer. To qualify for a guaranteed installment agreement, these are some of the conditions that must be met, such as:
The streamlined installment agreement is usually approved for taxpayers who are in more debt than those who qualify for the guaranteed installment agreement. The requirements for the streamlined agreement include:
On the other hand, there's also the Non-Streamlined Installment Agreement. This is for people who owe more than $25,000, but can make monthly payments to the IRS. Non-streamlined agreements require that the taxpayer file Form 433-F and need approval from the IRS before it goes into effect.
The final method to paying your taxes in installments is the partial payment agreement. This allows taxpayers to only pay a part of their owed taxes, but the plan must be approved by the IRS. Taxpayers must also file Form 433-F to provide proof of income and living expenses. If approved, you'll undergo a financial review every two years.
Depending on the type of installment agreement you have, there will be a fee for setting it up. If you owe $50,000 or less in combined individual taxes, penalties and interests, you can apply for an installment agreement online. However, if you owe more than $50,000, you'll need to complete and mail in Form 9465 and Form 433-F.
If you run into legal trouble, contact an experienced tax lawyer near you.
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