Payment Options For Your Tax Bill

Paying  taxes owed to the Internal Revenue Service (IRS) is not something you can afford to ignore simply because you lack the funds to do so. There are several options available to taxpayers who find themselves owing money to the IRS that they do not have readily available to pay.

If you ignore an IRS notice, and don’t pay your tax liability in full or make an alternative payment arrangement, the IRS is able to take collection action against you. This is something you want to avoid if possible. Refer to Topic 201 about “The Collection Process” on the IRS website for more information on this.

If you owe more than you set aside throughout the year for taxes and do not have enough money to pay your tax bill in full, the IRS will work with you. Making an arrangement with them is a much better option than avoiding the situation and hoping it will all just go away.

The IRS offers 120 days of additional time to pay what you owe. If you can pay in full within that time frame, no fee will be charged for this type of payment arrangement with the IRS.

One of the options to pay what you owe to the IRS is to take out a personal loan if one is available. You could also get a cash advance from your credit card, or just charge it to make the payment of what you owe. The interest rate and fees charged by a bank or credit card are generally smaller than the interest and penalties imposed by the IRS.  Although this is an option, it is important to understand incurring more debt to pay off another debt is not always advisable, unless the fees and penalties from the IRS will be more than the interest charged from a loan or credit card bill.

Installment Agreements or Payment Plans are another option you might consider. These plans make it possible to pay off what you owe to the IRS over time in smaller, more manageable amounts instead of all at once. There is interest charged each month. So, the longer you hold a balance that is due, the more you will pay in the long run. The sooner you can pay it off the better.

According to the IRS website, they accept the following payment options  from sources such as:

• Direct Debit from your bank account

• Payroll Deduction from your employer

• Payment via check or money order

• Electronic Federal Tax Payment System (EFTPS)

• Payment by credit card via phone or Internet, or

• Online Payment Agreement (OPA)

Once you have your bill, don’t delay in using one of the above forms mentioned to get your tax situation in order. Regardless of the way you decide to settle you debt with the IRS, just make sure you do so in a timely manner.