If you have a balance due and can’t pay the IRS in full by the April 15th due date, don’t panic. The IRS has many payment options available to help you take care of the tax that is due as quickly as possible. Ideally, you’ll be able to pay as much of your taxes as possible by the due date using any of these options:
- Direct debit from your bank account: You can enter your routing number, account number, and date into our software and the IRS will automatically withdrawal the funds from your bank account. You can use direct debit for full or partial payment of your taxes due for the year.
- Pay at the IRS DirectPay website: With IRS direct pay, you can enter your routing and account number and the IRS can withdrawal full or partial tax payments directly from your bank account.
- Use third party vendors to make credit, debit card, or digital wallet payments: The IRS vendors can be found on the Pay Your Taxes by Debit or Credit Card web page. You can make full or partial payments, but there is a user fee with any of these payment processors.
If you can’t pay the taxes in full by the due date, the IRS has several payment plan options.
- Short-term payment plans: If you owe less than 100,000 dollars in taxes, penalties, and interest, you can take a 180-day payment plan. Standard penalties and interest will apply, but there are no setup fees for a short-term payment plan.
- Long term payment plan: This monthly payment plan can last as long as 6 years from the date the IRS assesses the tax on your account after you file. Standard penalties and interest will be charged throughout the payment period or until the balance is paid off. There are 2 options of a long-term payment plan:
- Automatic withdrawals: This one requires every payment be automatically withdrawn from your bank account. The set fee for this is only $31, and you must use automatic withdrawals if your balance is more than $25,000.
- Non-automatic payments: This plan allows you the freedom to make your payments in your own time each month so long as you pay by the monthly due date. However, the user fee for this plan is $130 (or $43 if your income is low enough).
- If you ever pay late or file another tax return with a balance due that is not paid by the filing deadline while in a payment plan, you’ll need to apply for reinstating and revising your payment plan. The user free fee for reinstating a payment plan is $10.
Applying for a payment plan can be done in any of the following ways. The online payment application is the least costly application method. In the instructions for Form 9465, there’s a chart that can be used to figure out your application fees, and there are reduced fees and fee waivers available for lower income taxpayers:
- Fill out and mail in Form 9465, Installment Agreement Request. You can find Form 9465 here. On the you’ll want to include bank routing and account information, the amount you can afford to pay per month, the amount of the balance due for the current tax return plus any balances that are still due for prior years, and you’ll choose the date that you want the payment withdrawn from your bank account. The monthly payment needs to be an amount you know you’ll always have sufficient funds to cover in your bank account. If the payment is ever rejected because of insufficient funds, the IRS will default your payment agreement and charge you a 25-dollar civil penalty. If the balance due is more than $50,000, you’ll need to apply using Form 9465, and you’ll need to provide financial information using Form 433-F, Collection Information Statement.
- Apply online using the IRS Online Payment Agreement Application. You’ll either need to use the ID.me account you set up to handle stimulus payments during the pandemic, or you’ll need to set up an ID.me account with photo ID verification. Once you are logged into the IRS system, you’ll be able to provide the IRS with all of the necessary bank routing and account information, your desired payment amount, and payment date. Further, the IRS Online Payment Agreement Application will let you know immediately whether the IRS will accept your application or whether you need to make higher payments.
- Apply by calling the IRS or in person at any IRS Taxpayer Assistance Center.
If the IRS doesn’t accept your payment plan, they’ll usually counter with a higher amount for the monthly payment. You can choose to accept the counter, or you can submit financial information that can show the IRS that you don’t have enough money to make their higher requested payment amount. If you submit financial information, you’ll need to be prepared to include other financial documents like bank statements, utility bills, rental agreements, and/or mortgage statements.