Owing money to the IRS is stressful and can be overwhelming. After all, the IRS is persistent and thorough when it comes to collecting what is owed to them. You can find yourself facing stiff penalties, interest, and even tax liens if you don't meet your obligations. However, what happens when you have a tax debt that you simply can't pay in full? Here's a look at what you need to know about payment plan options for tax debt relief.
Know Your Full Balance
Before you can even consider any kind of payment arrangement with the IRS, you need to know exactly how much you owe. That means ensuring that your tax filings are completely current first. You can request a tax account transcript from the IRS to ensure that you haven't missed any filing years if you're not sure.
In addition to the filing transcript, you should verify your total outstanding tax debt balance. That way, you know precisely where you are starting from. It's easier to budget and determine how long it will take to pay it off when you know how much you're dealing with.
Choose Your Payment Plan
The IRS offers a variety of payment plans depending on how much you owe them in total. You'll see the options available to you when you sign into the payment application portal. Your repayment period will vary based on the amount you owe and the type of payment plan you select, but you'll typically have up to 72 months to repay your tax debt.
Follow The Requirements
It's important to note that there are some requirements you must adhere to in order for the IRS to consider your repayment agreement to be in good standing. For example, you must file all of your future tax filings and make your future tax payments on time and in full. Additionally, you must make all of your payment arrangement payments on time. You can save some money on your payment plan establishment if you opt for direct debit for your payments.
Tax debts can leave you facing all sorts of legal trouble if you don't get them under control quickly. The sooner you address your outstanding IRS debts, the better off you will be. If you're not comfortable trying to navigate the process yourself, work with a tax debt relief contractor for more help. They can walk you through the process and help you find the right payment plan option for you.