By Rosalyn Partin, H&R Block
Ways to Pay Your Tax Due
Each year, about 30 million taxpayers file and owe the IRS. For those who owe, the IRS allows you to make “other” arrangements if you can’t pay the tax with your return.
Payment arrangements can include payment plans, extensions to pay, or hardship agreements such as payment deferral (called “currently not collectible” status) or an offer in compromise. Many of these payment arrangements come with fees, so it’s helpful to know what you’re in for when making arrangements with the IRS.
If you are able to pay your tax balance due by the due date, you can pay the IRS by mailing a check or directly from your bank account using a bank draft when you efile. You can also use the IRS Direct Pay option on the IRS website, irs.gov. IRS Direct Pay lets you choose to pay by bank draft or with your debit or credit card. For debit/credit card payments, there are service fees charged by the IRS approved payment processors.
If you aren’t able to pay your balance due by the due date you may want to consider setting up a payment arrangement with the IRS. Unless IRS rules consider you to be a low-income taxpayer, most payment arrangements require a setup fee with the IRS. However, there is no fee if you just ask for an extension of time to pay (the IRS can give you an extension of up to 120 days). If you will need longer than 120 days to pay the full balance due, you can apply for an installment agreement. The IRS will usually grant an installment agreement with payments spread over 6 years. Depending on the amount owed, you may be asked to provide detailed financial statements or use existing assets to pay the balance.
Depending on your financial situation, you may be able to be placed in “currently not collectible” status. Currently not collectible (CNC) status will mean that you don’t have to make payments to the IRS until your financial situation improves. To obtain CNC, you must prove to the IRS that you can’t pay based on your current income and necessary living expenses. There are also additional programs available from IRS to allow payment of your balance due when you are in a financial hardship.
It’s best to make arrangements immediately after you file and know you can’t pay the balance. If you can’t pay, it may be best to get help from a tax pro who can help you sort out what options are best for you. Tax pros can analyze your details and work with the IRS to get you the best outcome for your situation.
If you have a tax balance due and need help considering your options, call H&R Block. In Manchester TN call 931-728-9462. H&R Block Has Your Back!
