Don’t Let A Big Tax Bill Scare You: Tax Payment Options

If you’re facing a large tax bill, don’t panic. There are options available to you.

If you’re like most hard-working taxpayers, the thought of a sizable tax bill is enough to make you break out into a cold sweat. However, the worst thing you can do is ignore your tax bill, since the legal and financial consequences can be far-reaching and far worse than the tax bill itself. There are tax payment options available to you. Here’s a look at some of them:

If your tax bill is $10,000 or less, you may be eligible for the IRS’s guaranteed payment plan. One thing to keep in mind is that the program doesn’t cover your fees and/or penalties, which could nudge your tax bill over the $10,000 threshold.

This program also doesn’t cover any delinquent employment taxes.

Under $25,000

If you owe more than $10,000 but less than $25,000, one tax payment option available to you would be the streamlined payment plan offered by the IRS. Under this plan, you would pay off your tax debt in 72 months or less. Additionally, this plan will allow you to have any tax liens released.

$25,000 or more

If you owe between $25,000 and $250,000, the IRS offers a streamlined payment program in which you pay off your tax bill within 72 months, but any tax liens  filed against you will not be paid off as part of this plan.

If you find yourself unable to pay off your tax debt in 10 years the IRS offers the partial payment plan.

You may need to liquidate certain assets in order to pay your tax debt under this plan, and the IRS will review  your financial information every one to two years to confirm that you are still eligible for this tax payment option.

Regardless of the program you choose, you’ll need to satisfy the following requirements:

• Accurately disclose all income and assets
• File all tax returns, including past due tax returns
• You must agree to make timely payments

You may also renegotiate the terms of your payment plan if there is a change in your income. Less income due to job loss or other hardship may result in a lower payment, while to opposite is true if your income increases.

Facing a sizeable tax bill is stressful. At the same time, there are payment options available to you. Always consult with a licensed tax professional before negotiating with the IRS.

Your tax pro will negotiate on your behalf, and will also ensure your rights are upheld as your case progresses.