It is not a dead end if you cannot pay your tax bill in a timely manner. You can apply for an installment agreement and if it is granted by the IRS, you will be given a chance to pay your taxes in monthly installments to pay for the taxes you owe.
However, consider looking for other ways to pay off your back taxes first. Even if you can pay in installments, there are still certain fees and charges that may be applied by the IRS. If you will borrow money from financial institutions or make cash advance from your credit card, consider calculating if the interest fees you will have to pay is still lesser than that of the charges by the IRS. This way, you will know if you can save more money by borrowing from others to pay off your back taxes.
Should you still opt for to apply for an installment plan, take note of certain important things before submitting your application:
- You filed all the required tax returns. If you didn’t, you will not be allowed for an installment plan by the IRS.
- Determine how much you can pay each month. The minimum is $25, but it is advisable to do your best to pay off your taxes at the soonest possible time.
- Any future tax refund will be applied to outstanding tax.
The IRS gives taxpayers the option to apply online if your taxes, interests and penalties are equal to or less than $50,000. You may also refer to your tax bill for the contact numbers that you can call in order to start the application. You can also use Form 9465-FS, Installment Agreement Request. If you owe more than $50,000, submit an accomplished Form 433-F, Collection Information Statement.