If you have tax debt that you simply are financially unable to pay in one lump sum you do have options, including IRS installment plans. Here are five different ways that may be available to you for paying off your tax debt.
Guaranteed Installment Agreement
A Guaranteed Installment Agreement is for those individuals who have been current on their taxes for the previous 5 years, meaning they have filed and paid their taxes on time. In order to qualify you must also owe $10,000 or less and not have any other installment plans currently in place with the IRS. If you have filed for or are in bankruptcy or had an Offer in Compromise accepted you will not be able to receive a Guaranteed Installment Agreement.
Once you fill out the paper work (or you can use the Online Payment Agreement) and qualify for the Installment agreement you normally pay the amount owed in monthly payment over a time period of three years or less.
Streamlined Installment Agreement
If you owe less than $25,000 in back taxes or tax debt you may qualify for a Streamlined Installment Agreement. In order to qualify any back taxes owed must be less than five years old and you must have filed all of your previous year tax returns. You can not be in bankruptcy, have filed for bankruptcy, had an Offer in Compromise accepted or have any other current IRS installment agreements in order to qualify.
Once you fill out the paper work and qualify for the streamlined installment agreement you must pay back the amount owed in monthly payments over a time period of five years or less.
Verified Financial Installment Agreement
The Verified Installment Agreement payment plan is offered by the IRS to those individuals who owe over $25,000 or for those that are unable to financially make their minimum monthly payment in a Streamlined Installment Plan. To qualify your tax debt must be within the last 5 years and you must have filed all of your back tax returns. You also can not have any other current IRS installment agreements in place or be in bankruptcy. You must agree to pay back the amount due in payments over time.
In order to qualify for a Verified Financial Installment Agreement you must also fill out forms to verify your income, debts, assets and more. These plans are very hard to get and require proof that you do not have the means to pay any other way. Many people seeking this type of agreement get help from a tax professional.
Partial Payment Installment Agreement
If you truly do not have the financial means to pay off your taxes, even with an installment agreement you may qualify for a Partial Payment Installment Plan. You will need to fill out a number of forms and provide full financial disclosure to the IRS so that they can verify that you truly cannot pay. Like the Verified Financial Installment Agreement, these are very hard to get. The IRS even advises those individuals who are looking to qualify to get help from a tax professional. If you do get approved you will be able to pay back partially what you owe over time and the rest of the debt will be forgiven.
Credit Card
A final way to pay off IRS tax debt is to use your credit card. This is usually not recommended as the interest is normally very high (due to the credit crunch) and the fees associated with doing so are high. You should be careful in choosing this route. You can find more about the convenience fees associated with a credit card payment here: http://www.irs.gov/efile/article/0,,id=101316,00.html
This guest post was submitted by TaxDebtHelp.com, a site that provides guidance for taxpayers facing Federal tax debt problems. If you are looking for more information on various IRS tax payment plans, or IRS Tax Installment Agreements, visit their site today.
Leave a comment