Owe money to the IRS? Here’s how to pay off your balance

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owe money to irs

Did you owe money to the IRS this year? Here’s how to pay your balance. This tax season was unlike any other for me. Rather than a refund I used to receive, it turned out I owed money. That didn’t come as a complete surprise, I was expecting more of a break even, but the fact that I had to make a payment was unpleasant. The good news was that I had enough money to cover the liability, which I did immediately to get it over with. I was so happy to have finished working on my taxes that I didn’t think on the other scenario, what if I didn’t have enough money to pay off my balance in full?

Here’s how to settle your tax liability if you don’t have enough money to pay it in full

If paying your tax liability in full and on time is not possible, set up a payment plan to avoid paying penalties and interest. If you owe $50,000 or less in individual income taxes and you can commit to pay it within 72 months, you can set up an Online Payment Agreement. You can request the payment plan online and receive an immediate response.

You should have the following information available:

  • Social Security number or Individual Tax ID
  • Date of birth
  • Caller ID shown at the top of your recent notice (if applicable)
  • PIN number or AGI
  • Bank address
  • Employer address
  • Highest amount you can pay and when
  • Most recent tax return for information verification

You can make the same request on paper by filing Form 9465. Taxpayers who owe more than $50,000 or need more than 72 months to pay off the liability may be requested to submit either Form 433-A or 433-F.

IRS Fresh Start program

Online Payment Agreement to set up an installment payment is a part of the IRS Fresh Start program trying to help taxpayers pay back taxes and avoid tax liens. The other two parts of Fresh Start include:

  • Tax Liens – the IRS has raised the minimum amount a taxpayer owes before a lien against a property is filed. Although that limit was raised to $10,000, there are exceptions from that rule and the IRS reserves the power to file a lien even for smaller amounts.
  • Offer in Compromise (OIC) – allows taxpayers to settle their liabilities with the IRS for less that the actual amount owed. This program is reserved for those experiencing economic hardship and requires a proof of inability to pay the full amount. If you think you may quality, try OIC Pre-Qualifier Tool.

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