Paying taxes is no one’s idea of a good time, but it’s an unavoidable fact for many people throughout the economic spectrum. Lacking the money to pay taxes is more common than you’d think, with citizens of the United States owing over $114 billion in back taxes to the IRS. It’s not the end of the world if you can’t afford your taxes as long as you know the IRS tax payment plans.
These plans are designed to provide relief to US taxpayers who are struggling to make ends meet. They’re a viable option if you need tax relief during a given year.
Luckily, you’ve discovered this helpful guide about qualifying for the IRS tax payment plan and your options for paying back what you owe. Continue reading to find out if you are eligible for tax assistance and relief today!
What Are IRS Payment Plans?
You can use the IRS payment plans to pay the IRS what you owe on your past income when money is short. You receive an extended period to gather your funds and pay the IRS to avoid penalties and interest on your taxes. These payment plans for taxes allow you to take tax liens off the table and avoid unnecessary stress.
The IRS charges a penalty to those who fail to pay, which rises by 0.5 percent each month, so failure to get an extension or payment plan will cost you. The interest rates you’ll get from the IRS with our payment plan range from three to seven percent, making it a better option than paying your taxes with a credit card.
Short-term payment plans provide an extension of 180 days to pay what you owe to the IRS. You qualify for a short-term payment plan if you owe less than $100,000 to the IRS, and the application process starts online for free.
If you need more time to pay, the application process starts through mail or telephone correspondence with the IRS. You should also consider a long-term streamlined tax payment plan if you owe more and need more time to pay what you owe. You’ll get up to six years to pay the money you owe to the IRS.
Who Is Eligible for the IRS Tax Payment Plan?
Now that you have some background on what the IRS payment plan entails, it’s worthwhile to dive into whether or not you qualify for this tax relief option. You’re guaranteed to qualify for tax relief if you owe the IRS less than $10,000 in taxes. To qualify, you’ll also need proof of filing taxes for the past five years.
Another hurdle to clear when getting approval for IRS tax payment plans is the promise to pay what you owe in full within 36 months. You can’t be involved in a bankruptcy hearing, and you’ll need to prove that you can’t afford to pay your taxes in full for the past year.
It’s still possible to qualify if you need more than three years to pay what you owe. With five years of past filings, you can be eligible if you owe less than $50,000 in taxes. Most agreements take minutes to set up and agree to with the IRS, though it’s wise to consider working with tax settlement companies.
You can make monthly payments with direct debit from your bank account if you owe over $10,000. It’s an excellent way to chip away at what you owe in taxes if you’re struggling to make ends meet.
Benefits of Working With Tax Relief Firms
Navigating the process of securing an installment agreement for taxes with the IRS is not for the faint of heart, especially if it’s your first time. Working with a tax relief firm for your tax installment agreement will take a massive burden off your shoulders as you get the money together to make your payments.
It’s worthwhile to consider hiring a firm to help you navigate this process and secure the best IRS tax payment plan for your financial situation. Here’s a deep dive into the benefits of working with a tax relief company to get the tax payment plan you need.
Reduce Your Balance
Working with a tax relief firm to get access to IRS tax payment plans is an excellent option if you want to reduce your balance on what you owe. Penalties and fees often add to what you owe, especially if you cannot make your tax payment in April. Experts at a tax relief firm will help you avoid paying these penalties depending on your financial circumstances.
Proof that you cannot make your payments will help get the burden of penalties off your back. These additional fees will get removed from what you owe, making your installment agreement for taxes much more affordable.
Avoid Losing Property
A tax lien is one of the worst consequences of failing to pay taxes. This lien gives the IRS the right to seize your home or property to make up for the taxes you’ve failed to pay. It’s daunting but something you can avoid if you work with a tax assistance firm.
Prevent Wage Garnishment
Another tactic you can avoid with the IRS through a tax payment plan is wage garnishment. The IRS can use your wages to collect past-due balances on taxes you owe. Using a tax assistance company to get the best tax payment plan allows you to skirt this financial penalty when you lack the funds to pay taxes.
Find the Best Tax Payment Plan Today
Falling behind on your taxes doesn’t have to spell your doom if you know that you qualify for IRS tax payment plans and tax relief. These payment plans provide more time to get your finances together to pay what you owe to the IRS without penalties, though you’ll need to meet all the qualifications. Ensure you’ve filed taxes for the past five years and owe less than $10,000 before applying.
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