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When evaluating your tax payment options, the installment agreement might be something that you want to consider. The IRS offers these agreements as a service to taxpayers so that they can more easily pay their tax bill. Here are the basics of installment agreements.
Installment Agreements
With an installment agreement from the IRS, you will be able to break up your tax bill into multiple payments. Instead of paying a lump sum like many people do, you can make a monthly payment to the IRS. Not everyone will be able to qualify for an installment agreement program. If you owe less than $25,000 on your taxes, you should be able to set up an installment agreement. If you owe more than $25,000, there is a chance that you will be able to set up an installment agreement. If that is the case, you will have to fill out a Collection Information Statement Form 433F.
Setting Up the Installment
If you want to set up an installment agreement with the IRS, you can do so directly from their website. You will be able to access the Online Payment Agreement form. Complete the form and then you should be able to start your installment agreement right away.
Payment Options
With an installment agreement from the IRS, there are a number of different payment options that you can look at. If you have access to a local IRS office, you can make payment by cash. You can also send a check or money order through the mail. You could also send a cashier's check through the mail. If you want to pay by credit card, there are a few different websites that you can visit to do so.
The Electronic Federal Tax Payment System or EFTPS is a system that was designed in order to allow individuals to pay their federal taxes securely. With this system, you will be able to get on their website and make a payment or you can make a payment over the phone. One of the big benefits of this system is that you can set up the payments whenever you want. For example, if you have to make quarterly tax payments, you can instead decide to have a certain amount deducted from your account every week or month. This way, it will seem like the tax payments are much more reasonable.
You can set up an automatic debit with the IRS so that your payment comes out of your checking account without having to do anything. Another method that they recommend is having your tax deducted from your payroll. Both of these methods provide you with a way to make payments that will not incur any late fees along the way.
Fees
In order to set up an installment agreement, you will have to pay a fee. The fee for a new agreement is $105. However, if you use automatic debit from your account, it will only be $52.
