If you owe more taxes than you can afford to pay, you may qualify for an IRS Installment Agreement. In other words, you can settle tax debt in affordable monthly payments. Furthermore, IRS Installment Agreements have provided tax relief to millions of Americans. In addition, our tax relief services include help with filing for an Installment Agreement. If you're wondering if an Installment Agreement is for you, get in touch with our firm. IRS Installment Agreements are one of the most popular ways to settle tax debt. Why? Because it gives you an affordable way to pay back taxes. However, negotiating an IRS Installment Agreement isn’t always easy. Therefore, let us help you with dealing with the IRS. Our goal is always to get the best outcome for our clients.
What is an IRS Installment Agreement?
With an Installment Agreement, the IRS allows you to pay down your tax debt in monthly payments. However, interest and penalties will still accrue while you're paying through an Installment Agreement. Therefore, the IRS recommends settling tax debt immediately. The less time you spend paying through an IRS Installment Agreement, the less you will owe in the end. Likewise, IRS interest and penalties can equal 8 to 10 percent per year.
When should I apply for an IRS Installment Agreement?
If you can't pay your taxes all at once, an IRS Installment Agreement is a good solution. However, negotiating an IRS Installment Agreement isn’t always easy. The goal is to come to an agreement on an amount that is comfortable for you to pay. To determine what this amount is, the IRS typically subtracts basic living expenses from your income. However, once the IRS does this, it typically doesn’t leave you with that much money left over. Therefore, it's always beneficial to have a tax relief services professional help you. The professionals at FinishLine Tax Solutions can help you reach the best outcome for paying back taxes.
Who qualifies for an IRS Installment Agreement?
The type of IRS Installment Agreement you will qualify for depends on your specific tax situation. In other words, how much you owe will determine which payment plan you should apply for. The IRS lets you pay for your taxes online in the following ways:
- Full payment
- Short-term payment plan. In this case, taxpayers settle tax debt in 120 days or less.
- Long-term payment plan. This is the most common form of an IRS Installment Agreement to settle tax debt. In this case, taxpayers have more than 120 days to pay back taxes.
IRS Installment Agreement Requirements
To apply online for an IRS payment plan, you must satisfy the following depending on your status.
- For an IRS Installment Agreement (long-term payment plan), you must owe $50,000 or less. Furthermore, this amount must include taxes, penalties, and interest. Additionally, you must have filed all required tax returns.
- For short-term payment plans, you must owe less than $100,000. Furthermore, this amount includes taxes, penalties, and interest.
IRS Installment Agreement Requirements for Businesses
Additionally, businesses can also qualify for IRS Installment Agreements. Furthermore, here are the requirements for a business to file for an Installment Agreement online.
For a long-term IRS Installment Agreement, you must owe $25,000 or less. Furthermore, this total must include taxes, penalties, and interest. Additionally, you must have filed all required returns.
Additionally, if you're a sole proprietor or independent contractor, you must apply as an individual.
Can you have multiple IRS Installment Agreements?
Taxpayers often wonder if they can have two IRS Installment Agreements going at once. The answer is—this is not technically a way you can settle tax debt. However, you can add to your current Installment Agreement. For example, if you're paying back taxes, and you owe taxes this year, you can amend your Installment Agreement. However, be mindful that this might increase your overall monthly tax payment. Therefore, the IRS always advises paying as much of your tax debt as you can. If you end up owing too much per month, you run the risk of defaulting. In other words, you might be setting yourself up for big trouble with the IRS.
What is the minimum monthly payment for an IRS Installment Agreement?
An IRS Installment Agreement is an excellent tax relief service. In fact, it's one of the most popular tax relief services for individuals looking to settle tax debt. However, the minimum monthly payment for an installment agreement isn’t set in stone. In other words, you can essentially choose how much you pay every month. First, the IRS will ask you how much you can afford to pay. However, keep in mind the IRS will encourage you to pay as much as possible. This is where a tax relief services professional can come in handy. In other words, if you don't answer correctly, you might not like your monthly payment amount. You want to be careful not to select too low of an amount. Additionally, you don't want the IRS to pick a payment for you. If the IRS selects for you, they'll divide what you owe by 72.
What if I owe less than $10,000?
If you owe the IRS less than $10,000, you will automatically be approved for an IRS Installment Agreement. Furthermore, there is no minimum payment as long as you agree to pay off your balance in three years. However, keep in mind for balances of above $10,000 you will have to provide additional information to qualify. Therefore, working with a tax relief services company is imperative when applying for an IRS Installment Agreement. A tax relief services company can help you ensure you get the best outcome with your IRS negotiations.
What if I owe in back taxes between $10,000 and $25,000?
There are other forms of IRS Installment Agreements you may qualify for you if you owe more than $10,000. One of these programs is called a Streamlined Installment Agreement. However, keep in mind that acceptance to this IRS installment agreement isn’t always guaranteed. The IRS typically requires more financial records to apply for this program. With a streamlined plan, you have 72 months to pay. Additionally, your minimum monthly payment is typically your balance divided by 72.
What if I owe between $25,000 and $50,000?
It can sometimes be hard to qualify for an IRS Installment Agreement with larger tax debt balances. For this reason, working with a tax relief services professional can be extremely helpful. When you owe more than $25,000, the IRS usually wants to know about your income and expenses. Likewise, your minimum payment will be your balance divided by 72.
What if I owe the IRS more than $50,000?
If you owe more than $50,000 in tax debt, you can still apply for an IRS Installment Agreement. However, keep in mind that the IRS will conduct a more thorough review of your finances. Additionally, you may have to sell some of your assets to pay down your remaining balance. Lastly, your minimum payment will be unique, depending on the deal you make with the IRS. In this case, it's especially beneficial to work with a tax relief specialist.
What are the benefits of an Installment Agreement?
There are many benefits of an IRS Installment Agreement. First, it gives you an affordable way to pay down your taxes. However, one of the main benefits is the IRS will not take any collection activities out on you. In other words, while you’re paying back taxes, the IRS cannot issue:
- Federal tax lien
- Bank levy
- Tax lien
- Wage garnishment
Furthermore, your assets are protected when you’re paying back your tax debt. When you have outstanding tax debt, the IRS can use whatever aggressive tactics they want to get it. However, when you're in an Installment Agreement, they know you're serious about paying back taxes. Additionally, an IRS Installment Agreement makes it easier for you to keep up with your other bills. Lastly, an Installment Agreement reduces the failure to pay penalty by half when you're enrolled in the plan.
What are the disadvantages of the IRS Installment Plan?
There are also a few disadvantages to an IRS Installment Agreement. For instance, you will still incur penalties and interest while enrolled in the plan. Penalties and interest accrue each month that the debt isn’t paid in full. Therefore, you will have paid much more by the time the total tax is paid off.
Want to apply for an IRS Installment Agreement? Call FinishLine Tax Solutions
Are you looking for a solution to your tax debt? If so, call the tax relief services experts at FinishLine Tax Solutions. We can help you settle tax debt with an IRS Installment Agreement. Our team has years of experience helping taxpayers file for IRS Installment Agreements. Additionally, we can negotiate a monthly payment that works best for you. In other words, if you work with us you won't have to ever talk to the IRS again. We'll do all the heavy lifting so you don’t have to worry about your tax debt ever again. Call us today to get started on the road to tax debt freedom.
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