When you file your taxes, finding out that you owe the IRS some money can feel overwhelming. Maybe you underpaid your taxes throughout the year, or maybe you suddenly owe a large sum due to capital gains or forgiven debt.

In any case, the key is to take action as soon as possible. After all, if you can’t pay your Irs Tax Bill on time, you may face penalties, wage garnishment, and even seizure of your property. 

Thankfully, you don’t have to panic, even if you owe the IRS significant money. You can often work with the IRS directly, and you have other options too.

If you’re wondering how to pay back the IRS, read on for five tips that will help you find the Payment option that works for you.

1. Get a Short-Term Payment Plan

If your tax debt is under $100,000, the IRS offers a short-term payment plan that gives you 120 days to pay off the balance. This is a good option if you only need a short time to get the money from another source.

This option is available for both individuals and businesses, and you can apply entirely online through the IRS website. Otherwise, you can apply over the phone, or you can fill out IRS Form 9465 to mail in or present at your local IRS office.

When using the short-term installment option, you’ll still owe the IRS interest on the tax debt and pay a penalty of 0.25 percent a month. But you will not have to pay anything to set up the payment plan itself, regardless of whether you sign online, through the mail, or over the phone.

You can make your payments through electronic transfer from your bank or savings account, and for tax debts over $25,000, regular automatic withdrawals are mandatory.

2. Request a Long-Term Installment Plan

If you need up to six years to pay off your IRS Tax Bill, then you can apply for a long-term installment plan. This comes with the same 0.25 percent a month penalty as the short-term option, along with interest charges.

This plan normally allows you to divide your tax bill up by 72 to come up with a monthly payment you can afford. However, making larger payments to pay off the debt sooner will reduce your total penalties and interest. 

You can apply online on the IRS website as long as you owe $50,000 or less. Otherwise, you have to download IRS Form 433-F and 9465-FS, fill them out, and either mail them in or take them to the local IRS office. 

The cost of setting up a long-term plan depends on the application method, your payment method, and use of automatic withdrawals. It can cost up to $255, but low-income individuals can get a reimbursement for the cost.

3. Submit an Offer in Compromise

Another option when you can’t pay your taxes is to offer the IRS a portion of the tax debt you owe. You can use this to negotiate a lump sum amount or periodic payment plan for the smaller amount you agree to.

To qualify for an offer in compromise, you’ll need to have filed all your tax returns, made estimated tax payments, and not be in the process of filing for bankruptcy.

You’ll download IRS Form 656-B from the IRS website and fill in the forms included. You’ll have to provide information about yourself, your income and assets, your monthly expenses, and your desired minimum offer amount and payment option.

You’ll mail in or personally submit the completed booklet along with a $186 application fee and your initial payment. The IRS will notify you about whether it accepts or declines your offer.

4. Use Your Credit Card 

If you expect to pay your IRS tax bill very soon and don’t want to deal with an IRS payment plan, you can use a credit card to pay your tax bill as soon as possible. 

If you haven’t finished filing your taxes yet, you can simply pay at the time you file. Otherwise, you’ll use one of the IRS payment processors to make your payment online or over the phone.

This method is ideal is smaller tax debts and allows you to avoid the additional IRS penalties and interest that payment plans come with. However, you do have to factor in your credit card interest and the IRS processing fee for credit card payments into your decision.

5. Consider a Personal Loan

If you owe a large amount and need at least a few years to pay it off, you might consider taking out a personal loan to pay off your IRS tax bill.

Depending on your credit score, bank, and loan terms, you may end up paying less over time in interest and fees than you would with a long-term IRS installment plan. Interest charges for personal loans often are lower than for credit cards, too.

You may also be able to get a longer payment term that will make your payments more manageable. While it’s common for personal loans to offer terms of one to five years, some lenders like SoFi and Discover allow up to seven years.

You can apply for your personal loan online or at a local financial institution. Once you get your funds, you can use a bank transfer to pay off your IRS tax bill.

You’ve Got Options to Pay Your IRS Tax Bill

Now that you know how to pay back the IRS, take action immediately to reduce your fees and prevent the IRS from taking action for lack of payment. 

If you’re not sure which option is best for your case, or if the IRS is already taking action against you, it’s time to speak to a tax attorney. Hiring an attorney can help you avoid costly penalties and get the IRS to stop taking your wages or seizing your assets.

Feel free to contact us today for personal advice on paying your IRS tax bill.

The post Can’t Pay in Full? Here Are Five Tips to Help You Pay Your Tax Bill appeared first on Silver Tax Group.