While many Americans end up with a refund, some owe money to the IRS. Here are nine tips for taxpayers who owe money to the IRS:
1. Get a loan: If you receive a tax bill, it's better to pay everything even if that means getting a loan rather than make installment payments to the IRS.
2. Credit Card: The interest on the credit card might be less than the interest and penalties charged by the IRS. The IRS accepts credit cards.
3. Other payment types: You can also pay via electronic funds transfer, check, money order, cashier's check or cash.
4. Installment agreement: You can receive an installment agreement after filling out the forms. This is monthly payments of the remaining balance.
5. Online payment: If the balance owed is $25,000 or less including everything, then you can request an online payment installment.
6. Installment agreement request: After you mail IRS form 9465 along with the bill, you will hear from the IRS within 30 days about the approval or denial of request. If you owe $25,000 or less, then include the highest monthly payment possible.
7. Owing more than $25,000: The IRS form 433F, Collection Information Statement, is also required before an installment can be agreed upon. If you owe more than $25,000, then consider your economic status and then give the highest monthly installment payment.
8. One-time user fee: If the agreement is approved then there is a one-time fee of $105 or $52 for online payments. Those with lower economic status are charged a fee of $43.
9. W-4 form: Those who owe money may want to talk with their employer about changing their W-4, Employee's Withholding Allowance Certificate.
These forms can be obtained at IRS.gov.
Ken Lindow, CPA, MBA, lives and works in Ahwatukee Foothills. Contact him with tax questions or column topic ideas at (480) 940-8351 or Ken@LindowCPA.com.