Tax Payment Options

The IRS provides tax payers with several different tax payment options. As your balance is subject to interest and a monthly late payment penalty, payment in full of your tax liability is ideal. You can pay your income tax liability through check or money order made payable to United States Treasury. You may also pay using a credit or debit card by going to the IRS website.

If you cannot pay your tax liability in full by April 15^th, you have two options, a short-term extension of 120 days or an installment agreement. With the short-term extension, you have up to 120 days to pay your tax liability in full. With this option, you will not be charged a fee for entering into this agreement. However, you will continue to accrue interest and any applicable penalties until the liability is paid in full. 

The installment agreement allows you to pay your liability beyond 120 days through series of monthly payments. A variety of payment options offered by the IRS include:

• Direct debit from your bank account
• Payroll deduction from your employer
• Payment via check or money order
• Payment by Electronic Federal Tax Payment System (EFTPS)
• Payment by credit card via phone or internet
• Payment by Online Payment Agreement (OPA)

By entering into the standard installment agreement or a payroll deduction installment agreement, you will be charged a one-time user fee of $120. If you enter into an agreement and choose to pay through a direct debit from your bank account, the user fee is $52.

When entering into the installment agreement, your monthly payment will be based on your ability to pay and should be the amount that you can pay each month to avoid defaulting. You have the ability to choose your monthly payment amount as well as the date that your payment will be due.

To enter into an installment agreement, you must fill out and submit IRS Form 9465 Installment Agreement Request (available on www.IRS.gov). This form is where you will indicate the amount of your monthly payment and the date on which you will make your payment. The chosen date is the date they expect to receive your payment, so if you are mailing your payment, be sure to allow time for mailing.  If you are aware that you will need to enter into an installment agreement at the time of filing, you can attach Form 9465 to the front of your tax return. You may also submit Form 9465 after you file your taxes. The IRS will respond to your request within 30 days to advise you as to whether your request has been approved or denied. If you choose to do a payroll deduction from your employer, Form 2159 Payroll Deduction Agreement (available on www.IRS.gov) must be completed by your employer.

posted by Rachel Tussey