So, you're not one of the lucky ones expecting a check from Uncle Sam this year. In fact, you owe him, and you're worried it might break the bank to pay your taxes. There are a few options to help you remain in compliance with the law. For example, there are tax payment plans available from both the IRS and each state's department of revenue.http://www.irs.gov/businesses/small/article/0,,id=108347,00.html
Not paying your tax bill is not a responsible option. By not paying your taxes, you could be subject to fines, penalties, seizure of assets and possibly even jail. If you are faced with a tax bill that you can't afford, learning how to set up a tax payment plan will help you pay your tax bill at a manageable rate. Make sure that you begin this process by the filing deadline.
Step 1: Prepare Your Taxes
Even if you think you can't afford to pay what you owe, prepare your taxes and file them by April 18, 2011. This ensures that you will not be subject to a failure-to-file penalty, which can add as much as 25 percent to the amount you owe. You do not necessarily need to include a payment with your taxes, as the IRS will send you a letter requesting payment once they have verified your tax return.http://www.irs.gov/businesses/small/article/0,,id=108347,00.html
Step 2: Set Up an IRS Tax Payment Plan
The IRS has three methods you can use to set up a payment plan. In each case, you will need to pay a fee, select a payment amount, and commit to a monthly payment date.
Step 3: Follow the State's Procedures For the Payment Plan
Each state has their own policies and procedures for setting up a payment plan. The information may be contained in the instruction booklet that came with your tax forms. You can also go to your state's department of revenue website to view its procedures for requesting a payment plan. If the information is not available, call the customer service center, and let them know you would like to speak to someone about arranging a payment plan.http://www.irs.gov/businesses/small/article/0,,id=108347,00.html
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References
Meet Our Experts
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Jon Butler
Jon received a bachelor's degree in accounting with a minor in economics from Luther College in Decorah, Iowa. He offers private tax consulting and is also a licensed real estate agent in the state of California. He works with sellers of distressed properties (short sales and foreclosures) and a number of buyers and investors.
How to Set Up a Tax Payment Plan Tips
- Be prepared to pay a small amount of interest on what you owe if you set up a payment plan.
- Make your tax payment on time each month to avoid having your plan revoked.
- Try setting up an automatic payment system so that you never miss a month by accident.
Disclaimer: The content in this page is not a substitute for professional financial advice. Please contact your financial adviser before using the information presented here.
