Scenario- you filed your tax return and it turns out you owe money. Way more money than you thought. And you can’t afford to pay it all at once. What do you do?
One option is to set up a payment or installment plan with the IRS. If you owe less than $50,000 total (taxes plus interest and penalties) you can set up a payment plan. You can apply online at http://www.irs.gov/Individuals/Online-Payment-Agreement-Application or file the paper application Form 9465.
Information you will need
Make sure you have the following information handy:
– Bank account information (you will be setting up an electronic payment)
– Your employer information
– Tax return information
– Prior year’s adjusted gross income amount
– Your (and your spouse if you filed jointly) social security number and date of birth
– The amount per month you can afford to pay
It is very important that if you set up a payment plan you stick with it! If you default on your payment plan the IRS will move you into their collections process. You also need to make sure that you get your tax payments caught up in the current year either through payroll withholding or by making estimated quarterly tax payments.