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This morning, I talked about what happens if you file your taxes late. The short version is that you’ll face penalties that are more severe than if you had file your return (or request an extension) on time, but fail to include payment for the amount due.
Okay, but what if you can’t afford to pay the amount due? As it turns out, the IRS allows for what they call an “Installment Agreement,” which is basically a payment plan that lets you pay what’s due in smaller, more manageable increments.
If you owe $25k or less…
If you owe $25k or less, you can us the Online Payment Agreement (OPA) to set up your payment plan. Alternatively, you can use Form 9465. If you’ve already received a bill from the IRS, you also have the option of calling the number on the bill.
If you owe more than $25k…
If you’re in the unfortunate situation of owning more than $25k, you may still qualify for an Installment Agreement, though you might have to fill out Form 433F in addition to using the OPA or filing Form 9465.
Either way, it’s best to pay now…
Even if you set up a payment plan, you’ll still face penalties and interest for your underpayment, so it’s best to pay your taxes when they’re due – if at all possible. But if not, then be sure you jump through the proper hoops to keep yourself out of trouble. You don’t want to anger the IRS.
(More info on Installment Agreements from IRS.gov: link)
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