If for whatever reason you are unable to pay the full balance of your taxes by the original deadline, you’ll have to pay interest on that balance and monthly late payment penalties, which is why it’s so important for you to pay in full as soon as you can to save yourself some money from these additional charges.
However, if you’re not going to be able to pay off your balance in full right away or within 120 days after the due date, you might qualify for a monthly installment payment plan. You must apply for this plan using Form 9465, Installment Agreement Request, which you then submit to the IRS. If the IRS agrees to the plan, you’d be able to pay off your tax liability over time via options such as direct debit from a bank account, payroll deductions, credit card payments via internet or phone, EFTPS payments, payment with cash at a retail partner or payment via mailed check or money order.
There are, however, some requirements for being able to participate in such a plan. Here’s some information from our accounting firm in Union City, NJ.
Before you submit your request
Before the IRS will even consider any installment agreement request you submit, you’re going to need to be current on all of your filing and payment requirements. You cannot, for example, be involved in an open bankruptcy proceeding. You’ll also need to be specific with the amount of money you can pay and the day of the month on which you’ll make your payments. Therefore, you should spend some time considering that amount based on your ability to pay without defaulting.
The payment date you choose can be any date of the month between the first and 28th—just know that the IRS expects to receive the payment on that date, meaning you need to mail checks with enough time for them to reach their destination, or submit online payments with enough time for them to be processed.
If you are not able to pay any of the amount you owe because it would prevent you from meeting even some of your basic living expenses, you can request delayed collection. Expect the IRS to closely examine your financial situation to determine you truly cannot pay because of financial hardship. However, that does not mean your tax debt will go away—it will simply continue to accrue, as will penalties and interest. You will also not be able to receive a tax return—that money will likely be put directly toward the balance that has built up due to your failure to pay your taxes.
Of course, everyone’s financial and tax situations are different, so it’s important to work with a trusted accounting firm in Union City, NJ to get a better sense of the best way for you to proceed with your tax filing if you’re experiencing financial hardship. Contact Kedean’s Generation today if you have any questions, and we will be happy to provide you with the thorough answers you need for your circumstances.
Categorised in: Accounting Firm