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An unexpected tax bill is a surprise few people want to encounter. And when that balance turns out to be more than you can afford, its easy to feel overwhelmed.
Thankfully, the IRS has tax payment plans that can help you tackle your bill over time.
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Yes, the IRS offers several payment plan options to help taxpayers who can’t afford to pay their tax bill in full. These plans allow you to spread out your payments over time, making it easier to manage your debt and avoid penalties and interest charges.
What Payment Plan Options Are Available?
The IRS offers two main types of payment plans:
- Short-term payment plan (180 days or less): This plan is available to taxpayers who owe less than $100,000 in combined tax, penalties, and interest. You can apply for this plan online and make payments directly from your checking or savings account, by check, money order, or debit/credit card.
- Long-term payment plan (installment agreement): This plan is available to taxpayers who owe $50,000 or less in combined tax, penalties, and interest, and have filed all required returns. You can apply for this plan online and make payments through automatic withdrawals from your checking account (Direct Debit Installment Agreement) or by check, money order, or debit/credit card.
How Do I Apply for a Payment Plan?
You can apply for a payment plan online using the IRS’s Online Payment Agreement (OPA) tool. To apply you will need to create an account with ID.me and provide your Social Security number, tax return information and bank account information.
What Are the Fees for a Payment Plan?
The IRS charges a setup fee for both short-term and long-term payment plans. The fee for a short-term plan is $0, while the fee for a long-term plan is $31 for individuals and $130 for businesses. Low-income taxpayers may be eligible for a reduced or waived setup fee.
What Happens If I Can’t Make My Payments?
If you can’t make your payments on time, your payment plan may be canceled and you may be subject to additional penalties and interest charges You may also be able to reinstate your payment plan by paying a reinstatement fee.
Additional Resources
Frequently Asked Questions
Q: How long can I have a payment plan?
A: The maximum length of a short-term payment plan is 180 days. The maximum length of a long-term payment plan is 72 months.
Q: Can I change my payment plan?
A: Yes, you can change your payment plan online using the OPA tool. You can change your monthly payment amount, payment due date, or bank account information.
Q: What happens if I default on my payment plan?
A: Your plan will be canceled and you may be charged additional penalties and interest if you miss payments. If you pay a reinstatement fee, you might also be able to get your plan back.
To assist you in managing your debt if you are unable to pay your tax bill in full, the IRS provides a number of payment plan options. With the help of these plans, you can spread out your payments over time and more easily avoid penalties and interest. You can apply for a payment plan by calling 1-800-829-1040 or visiting the IRS website.
What is an IRS payment plan?
You can arrange a payment plan with the IRS to settle your federal tax liability over a longer period of time. You can set one up online, by phone or in person. The IRS offers short-term and long-term payment plan options.
Who is eligible for an IRS installment agreement?
The IRS says most taxpayers qualify, and you can apply online for a short- or long-term plan via the IRS Online Payment Agreement tool if you meet the following criteria for each plan:
- You may be qualified for a short-term payment plan if your total tax debt, including penalties and interest, is less than $100,000, you have filed all of your tax returns, and you have 180 days to pay it off.
- You might be qualified for a long-term payment plan if your total tax debt, including penalties and interest, is $50,000 or less, you have filed all of your tax returns, and you need more than 180 days to pay your tax bill.
The IRS states that you might still be able to apply by phone or mail if the tool indicates that you are ineligible to set up a plan online (more on that below).