If you owe taxes to the Internal Revenue Service (IRS) but can`t afford to pay what you owe in full, you may want to consider applying for an installment agreement. An installment agreement is a payment plan that allows you to pay your tax debt in smaller, more manageable amounts over time.
To apply for an installment agreement, you`ll need to complete Form 9465, Installment Agreement Request, and submit it to the IRS. You can do this by mail or electronically using the Online Payment Agreement (OPA) tool on the IRS website. The OPA tool is available to individuals who owe $50,000 or less in combined individual income tax, penalties and interest, or businesses that owe $25,000 or less in payroll taxes and have filed all their returns.
When you apply for an installment agreement, you`ll need to provide information about your income, expenses, and assets. The IRS will review this information to determine the amount of your monthly payment. If you owe more than $50,000 or don`t meet the requirements for the OPA tool, you may need to provide additional financial information and may need to submit a Collection Information Statement, Form 433-A or Form 433-F.
If your installment agreement is approved, you`ll need to make your payments on time and in full each month. You can choose to have your payments automatically deducted from your bank account each month, or you can make your payments manually online, by mail, or over the phone. If you miss a payment, you may be subject to penalties and interest charges, and the IRS may terminate your installment agreement.
It`s important to note that applying for an installment agreement doesn`t stop interest and penalties from accruing on your tax debt. You`ll still be responsible for paying the full amount you owe plus any accrued interest and penalties. However, an installment agreement can provide some relief if you`re struggling to pay your taxes in full and on time.
In conclusion, if you`re unable to pay your tax debt in full, an installment agreement may be a good option for you. Remember to provide accurate information when applying for an installment agreement and to make your payments on time and in full each month. If you have questions or need help with your installment agreement, contact the IRS or a tax professional for assistance.