Can’t Pay Your Taxes? The IRS Offers Installment Plans

As tax season moves into high gear, some people (many of them self-employed) are concerned about how much they will owe. When I put together the Profit & Loss Statement for my LLC, I realized that I am likely moving up a tax bracket this year. So, even though I pay my taxes quarterly, I will probably owe a little bit more this year. We’ve begun setting aside some money to cover the difference — just in case. (If I don’t owe too much more, then, happily, we can use the money for something else.)

But what if you can’t pay your taxes?

This is something that many are wondering, especially as the economy has resulted in unemployment, fewer hours and lower work loads for a number of people. (Bad news: Being unemployed doesn’t exempt you from paying taxes.) If you can’t come up with all of the money at once, it is possible to put together an installment plan. Yes, the IRS offers an installment plan to help you pay your taxes. And yes, you will have to pay interest.

If you owe less than $25,000, there is an Online Payment Agreement application that you can fill out. You will need the following information in order to complete the Online Payment Agreement form for your current tax return:

• Amount, from your tax return, that you owe to the IRS.
• Your taxpayer ID number.
• If you file jointly, you will need your spouse’s taxpayer ID number.
• Your birth date.
• Your adjusted gross income from last year’s tax return.
• The total tax you paid last year (found on your tax return).

There are different requirements and processes if you already have tax debt from years past, or if you owe more than $25,000. You can find out more about installment plans on the IRS Web site.