Question

I have a balance due on my return and can’t pay it. Can I set up an IRS payment plan?

Answer

To set up a tax payment plan or tax payment installment agreement is among the more costly options to pay your balance due. You might want to consider other less expensive options, including:

  • Pay by credit card.
  • Borrow from your 401(k).
  • Take out a personal loan.
  • File for a short-term extension — up to 120 days. This option has:
    • No fee
    • Penalty of 0.5% per month on unpaid balance
    • Interest of short-term federal rate plus 3% (interest might change each quarter)
  • Complete IRS Form 1127: Application for Extension of Time for Payment of Tax Due to Undue Hardship.

If you want to request an installment agreement:

  • Request an installment agreement with one of these:
    • Online payment agreement (OPA)
    • Form 9465 — If your liability is more than $50,000, you’ll need to file Form 9465 instead of using the online agreement. You must agree to pay the full amount within three to five years.
  • Pay an application fee of $120 ($52 if you make your payments by direct debit). You might qualify to pay a reduced fee of $43 if your income is below a certain level.

 

 

Related Topics

Related Resources

What Is Form 1099-G?

If you’ve received unemployment compensation or a state tax refund, you’ll receive Form 1099-G. Learn more about Form 1099-G and how it affects your taxes.

Taxes, Basketball, And Bracketology | 2017 Tax Brackets

What do 2017 federal tax brackets and March Madness have in common? The Tax Institute Director Gil Charney weighs-in. Read more from H&R Block.

Estimated Tax Form 1040ES

Do you need to file estimated taxes each quarter? Learn more about quarterly tax payments and get tax answers at H&R Block.

IRS Notice CP79 – We Denied One or More Credits Claimed on Your Tax Return

The IRS has disallowed one or more of the credits claimed on your tax return. Learn about your options to address IRS notice CP79 from the experts at H&R Block.