Need More Time to Pay Your Taxes? Here’s What to Do…
Many taxpayers require an alternative method of payment to pay their taxes.
If you can’t pay the total taxes you owe by April 15th, you have options.
What to Do If You Can’t Pay by the Due Date
First, pay as much as you possibly can to save on interest and penalties. Then, you can pay the remaining balance over time.
Here are three payment options the IRS offers, if you can’t pay your taxes by the due date:
Installment Agreement
One option is to apply for an installment arrangement with the IRS. This is a long-term payment plan, sometimes considered a monthly payment plan.
To be eligible to apply online, you must owe less than $100,000 for a 90 or 180-day payment plan, and $50,000 or less (including interest and penalties) for a long-term payment agreement.
In order to keep your agreement in good standing, you should agree to a reasonable monthly payment amount you can pay and be sure to pay any future tax liability on time.
This application procedure is fast, and you may do it online or over the phone.
Offer in Compromise
If you are eligible, you may be able to settle your back taxes for less than you owe using an offer-in-compromise (“OIC”). Taxpayers in difficult financial situations may want to apply for an OIC.
If you can demonstrate that you’re experiencing financial difficulties, you might be able to lower your tax debt and resolve it amicably.
To be eligible, you must be up-to-date on all tax return filings and any other tax payments.
You can use the Offer In Compromise Pre-Qualifier tool to determine your eligibility before submitting your application.
Currently Not-Collectible Status
If the IRS determines that you cannot pay any of your tax debt, it may report your account currently not collectible and temporarily delay collection until your financial condition improves.
The IRS won’t demand payment from you (until your situation has improved) if you can demonstrate financial hardship, which means you cannot currently make any payments. Therefore, if you cannot pay your taxes, you may be exempt from doing so until you can.
Please note that even if your request is granted, your unpaid debt would still be subject to fines and interest. The IRS may also use any upcoming refunds you’re owed to make up the difference. You’ll also need to pay any future taxes you owe on time.
To prove your financial difficulty and inability to pay, you may be required to complete a Collection Information Statement (Form 433-A, Form 433-F, or Form 433-B) and provide proof of your financial status.
In Summary
It’s never fun to owe money to the IRS and be unable to pay it, but it only becomes an issue if you do nothing. The IRS offers multiple options if you can’t pay your taxes on time.
If you need help resolving your tax debt, click here to learn more about IRS Shield and get the help and support you need from our team of tax professionals.