What To Do When You Owe The IRS Money And You Can’t Pay It

IRS payment plan

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.

Tweet it! If you owe less than $50k to the IRS and can’t pay it all at once you can set up a payment plan. bit.ly/1kJOVvv @BetteHochberger

recite-payment plan

 

Second 2013 estimated tax payment due June 15 2013

It is time to make your second estimated tax payment of 2013.  The deadline for making this payment is June 15.  For individuals you can get more information and vouchers here (the vouchers are at the end).

Corporations also need to file quarterly estimated payments.  Their payment dates depend on the month that their fiscal year ends, but payments are due on the 15th day of the 4th, 6th, 9th, and 12th month of their tax year- if you have a December year end that means June 15 is your next payment date.  To find out more information check out the instructions here.  Unfortunately corporations can’t send in paper checks- only electronic payments through EFTPS.

Any of this seem confusing?  Contact me for clarity!