The IRS offers installment agreements to taxpayers who are unable to pay their tax payment all at once. If you cannot meet your tax obligation currently or in the near future, you are not alone. Fortunately, you can request to make monthly payments to the IRS until you are paid in full. Here’s how:
Depending on the amount of taxes you owe and how quickly you are able to pay, there are a few different ways to set up an IRS payment plan :
- IRS Payment plan for individuals who owe less than $50,000 in federal taxes: The Individual Agreement Installment is the most common type of IRS payment plan for taxpayers in this category. Payments are made monthly, usually through a debit card. However, this type of IRS payment plan also accepts check or money order, credit cards online or by phone, EFTPS, payroll deduction from your employer, or an online payment agreement. To apply for this type of IRS payment plan, you’ll need to fill out a IRS Form 9465 (Installment Agreement Request). You can also apply through the IRS.gov website with the Online Payment Agreement Application.
- IRS Payment Plan for individuals who owe $50,000 or more in federal taxes: Individuals in this category must also fill out an IRS Form 9465 (Installment Agreement Request), as well as a Form 433-F (Collection Information Statement). The Form 433 will ask you to list your accounts and lines of credit, plus real estate and other assets. You will be asked to provide your monthly income, in addition to your monthly living expenses. Fill out both of these forms and mail them together to set up an IRS payment plan.
- IRS Payment Plan for Business Owners who owe less than $25,000 in federal taxes: Business owners can request a “In-Business Trust Fund Express” installment agreement (IBTF-Express IA). To be eligible, the business must have employees. This plan provides a 24-month period to pay the outstanding tax debt. If the amount owed is greater than $10,000 (and below $25,000), the business must set up a Direct Debit installment agreement.
Additional Information from the IRS website: It costs $120 to set up a standard agreement or payroll deduction agreement with the IRS, and $52 to set up a Direct Debit agreement. If your income is below a certain level, the fee for setting up an installment agreement is $42. To request this reduced fee, submit Form 13844 (Application for Reduced User Fee for Installment Agreements). The charge for reinstating or restructuring an existing installment agreement is $50.
Ready to make your federal tax payment to the IRS? Visit this post to learn where and how to send your payment.