No one likes owing the IRS money, but it happens to a lot of people. If you don’t have the cash to pay your tax bill all at once, don’t worry. The IRS has a few options that can help you out.
1. Using the Form 1040-V Payment Voucher
If you can’t pay in full at this time but are confident that you will be able to do so within 45 days, you can submit a partial payment by using the Form 1040-V payment voucher.
Form 1040-V is available from most tax preparation software providers and on the IRS website. After you receive the Notice of Tax Due and Demand for Payment from the IRS, you have
Twenty-one days to pay the amount specified in the letter. If you don’t pay within 60 days, the IRS can take action to collect the money you owe.
2. Via the Temporarily Delay Collection
If the IRS agrees that making you pay your tax debt right away would cause you undue financial hardship, they may allow you to postpone payment. However, this does not mean that your debt disappears. You will still owe the IRS but will not have to make payments until your finances improve.
If you want the IRS to classify your debt as “currently not collectible,” you’ll need to show that paying it would make it impossible for you to cover your basic living expenses. Keep in mind that even though your debt will technically be “on hold,” penalties and interest will continue to add up.
When the IRS agrees that your tax debt is “currently not collectible,” this means that they will not try to collect the money from you using levies or other methods.
3. Via Partial Payment Plans
If you cannot pay in full, you can ask the IRS if they will set up a partial payment plan. If you’re approved, you will be responsible for paying the debt off in installments. The IRS will determine the amount you pay, and you’ll be responsible for paying off the balance over a specific time period.
To set up a payroll direct deposit plan for your tax debt, you’ll need to submit Form 9465 to the IRS.
4. Via Offer in Compromise
If you simply don’t have the money to pay off your tax debt completely, you can negotiate with the IRS to get the debt settled for a lesser amount.
If the IRS approves your offer in compromise, you will owe them a reduced amount. Doing this will get your debt out of collection status, but they will apply interest toward the newly reduced tax debt.
5. Getting Help from Authorized Tax Professionals
If you’re trying to figure out how to pay off a tax debt without getting help from a tax professional, you’re not alone. Many people are afraid to use a tax professional because they perceive that they are more expensive or must pay them lots of money upfront. In reality, many tax professionals will work with you to devise a payment plan that works, especially if your situation is dire and you need their help immediately.
If you’re trying to figure out how to pay off a tax debt, a tax professional can help you figure out if you have options to pay off your tax bill and help you get started on an affordable repayment plan.
Paying taxes is one of the responsibilities of being a U.S. citizen. It’s also one of the main responsibilities of running a business. When the IRS comes knocking on your door, they’ll expect you to pay up. Not having the money to pay your debt is stressful, so if you aren’t sure how to proceed, use the information in this article to help you begin making repayments.
If you are looking for an institution that provides tax relief solutions in Birmingham, AL, look no further than our expertise here at Axiom Tax Resolution Group. Our trusted tax professionals are here to find a permanent solution to all your tax problems with the IRS. Call us today and let us discuss all your available tax options.