As a responsible citizen, it is essential to be up to date with your tax obligations. Unfortunately, we all go through tough financial times that can make it challenging to meet the demands of the IRS. However, failing to make payments can lead to severe penalties such as wage garnishments, levies, and even property seizure. Luckily, the IRS provides a solution for individuals struggling to pay their taxes on time – installment agreements.
An installment agreement is a payment plan that allows taxpayers to pay off their tax debt over time in monthly installments. With an installment agreement, you can pay off your tax obligation in a way that is affordable and convenient for you.
How to apply for an installment agreement with the IRS?
To apply for an installment agreement, you will need to follow these steps:
Step 1: Determine your eligibility
To apply for an installment agreement, you must first determine if you are eligible. The IRS considers several factors when evaluating your eligibility, such as your income, expenses, and the amount of tax you owe. You can determine your eligibility by using the IRS`s online payment agreement tool or by consulting with a tax professional.
Step 2: Choose the right type of installment agreement
Once you determine your eligibility, you will need to choose the right type of installment agreement for your situation. The IRS offers several types of installment agreements, including:
– Guaranteed installment agreement: This is for taxpayers who owe less than $10,000 and can pay off the tax debt within three years.
– Streamlined installment agreement: This is for taxpayers who owe less than $50,000 and can pay off the tax debt within six years.
– Non-streamlined installment agreement: This is for taxpayers who owe more than $50,000 or cannot pay off the tax debt within six years.
Step 3: Submit your application
After determining your eligibility and choosing the right type of installment agreement, you can submit your application. You can apply for an installment agreement by:
– Using the IRS`s online payment agreement tool
– Filling out Form 9465, Installment Agreement Request, and mailing it to the IRS
– Calling the IRS at 1-800-829-1040 and requesting an installment agreement
Conclusion
An installment agreement is a viable solution for individuals struggling to pay their taxes on time. However, it is essential to determine your eligibility, choose the right type of installment agreement, and submit your application correctly. Moreover, consider paying off your tax debt as soon as possible to avoid incurring additional penalties and interest. Remember, it`s always best to consult with a tax professional to ensure you are making the right decision for your financial situation.