5 Ways to Pay If You Owe the IRS Money
If you owe the IRS money, they expect to be paid and they make it easy for you to pay them, even if you do not have the funds in full. Not paying the IRS its due can lead to long legal battles, tax liens, tax levies, and the freezing of your assets.
It's in your best interest to review and double-check all relevant papers and obtain copies of necessary supporting documents concerning the amount of taxes you owe. Before submitting payment, it is wise to confirm the amount that you owe.
How to Pay the IRS
- The IRS expects to be paid promptly. If the taxes are not paid promptly then penalties will be levied. The ‘failure to pay penalty’ begins to be charged on the date that the taxes are due, April 15th. This penalty is charged between 0.25% and 1% of the unpaid or outstanding taxes owed to a maximum of 25% of the amount owed. If you do not have funds readily available, it may make sense to secure a loan rather than wait and pay it off.
- IRS accepts payments through credit cards. They accept payments through secure third party payment companies: Official Payments Corporation - www.officialpayments.com/fed Link2Gov – www.pay1040.com RBS WorldPay Inc. – www.usatax.comyour
- IRS accepts electronic transfer of funds, check, money order and cashiers check. Investigate Electronic Federal Tax Payment System at www.eftps.gov.
- IRS accepts payments in installments called an IRS Installment Agreement – Being unable to pay your taxes is not an acceptable excuse in the eyes of the IRS. Paying in one lump sum is ideal but if your financial situation does not lend itself to this option an Installment Agreement Request can be submitted. The IRS form 9465 should be submitted to request an installment plan for paying off your amount.*
- IRS may grant an extension for payment – If your tax bill is too large for you to pay off, the IRS may consider an option to file now and pay later. They only permit this option if the tax return is filed by April 15th . If you file by the deadline and have no means to pay the taxes the IRS may grant you an extension of 30 to 120 days.
*IRS Installment Agreement plans have some restrictions on them and negotiation for a payment plan will be granted if:
- All returns have been completed and received by the IRS by the due date.
- Agree to pay taxes on time
- You can prove that you have no other way to raise money to pay the taxes. This includes bank loans, savings, or borrowing from friends and relatives as well as liquidating any assets to assist in the tax payment.
If none of these options seem to fit your scenario then consider paying taxes through the Employee’s Withholding Allowance. This way the amount due can be removed from your paycheck and sent directly along to the IRS. Check out the online calculator available at IRS.gov to calculate the amount to be withheld from your pay check.
Some lucky citizens get money back from the IRS but if you are one of the unfortunate few who have to pay back money to the federal government understand Uncle Sam has the power to get the money you owe so they are sure to offer several options to pay, guaranteeing they get it from you.