Income Tax Payment Options Explained

If you filed your income taxes and discovered that you owe the IRS or the State of Maryland, you have several options when it comes to repayment, even if you can’t pay the entire sum at once. (If you haven’t filed yet, be sure to do so before the April 17 deadline, as failure to do so may result in penalties and interest).

Keep reading to learn more about your tax repayment options.

Standard Payment Options

If you have the funds available, you can pay by mail or online. To pay by mail, first view your balance and get a detailed summary of what you owe by visiting irs.gov/account. Then, enclose a check or money order (made out to the United States Treasury) and a copy of your tax return and send them to the appropriate IRS center. Include your name, address, phone number, tax year, Social Security number, and form number on the front of your payment.

The more convenient and speedy option is to pay electronically, which you can do through the IRS Payments webpage or the IRS2Go app. Use either of these platforms to schedule your payment in advance and receive immediate confirmation following submission. There’s no need to worry about safety, as the IRS uses advanced encryption technology to ensure the security of your personal and financial data.

You can also use IRS Direct Pay to pay estimated taxes or taxes that you owe from a Form 1040 or a similar form. IRS Direct Pay will withdraw the money you owe directly from your bank account at no additional charge. Again, you’ll receive instant confirmation, and you can rest comfortably in the knowledge that this process uses safe and secure encryption technology. You can also sign up for email notifications regarding your payment(s) and modify any payment up to two business days prior to the scheduled payment date.

Full Payment Agreements

If you can’t pay the full amount you owe immediately, you might qualify to receive an additional 120 days to pay. There is no fee to set up this agreement, but you’ll still be responsible for paying interest and penalties until you pay off your tax bill in full. The tax professionals at S.H. Block Tax Services can help you schedule this type of arrangement, so please contact us today for more information.

Installment Agreements

If you can’t pay your balance in full within 120 days, you might want to apply for an installment agreement, which allows you to make monthly payments until your account is in compliance. To qualify, you must be current with filing and payment requirements, and you can’t be involved in any current bankruptcy proceedings.

When completing your installment agreement eligibility form, you must include the amount you will pay and specify on which day of the month (1st-28th) your payment will fall. If you fail to make a payment, you could go into default and nullify the entire agreement, so make sure you don’t agree to a payment you can’t afford. In most cases, the IRS will either deny or approve your request within 30 days.

You can make installment agreement payments using any of the following options:

If you’ve already filed your return, you can request an installment agreement by completing the online payment agreement (OPA) application, even if the IRS hasn’t sent you a bill specifying what you owe. If you haven’t filed your returns yet, submit a Form 9465 or attach a written payment plan request with the proposed monthly amount and payment date to your return.

Offer in Compromise

The Offer in Compromise (OIC) program is part of the IRS’ Fresh Start Initiative, which helps people eliminate substantial tax debts they otherwise couldn’t pay. In most instances, the IRS negotiates an amount that is equal to the most they could expect to recoup over a reasonable time frame but is also less than what the taxpayer currently owes. This system helps the IRS avoid costly and wasteful collection efforts while allowing honest taxpayers to get back into compliance.

To apply for an OIC, you must be current with all filings and meet several eligibility requirements. There’s no guarantee you’ll qualify, but if you feel you are a potential candidate for an OIC, you can take the IRS’ Offer in Compromise Pre-Qualifier assessment to gauge your eligibility.

You can also call our offices for a free consultation. We have helped hundreds of clients successfully negotiate favorable OICs with the IRS and the State of Maryland, and we would love to put our experience to work for you.

Temporary Collection Delay

In cases where the taxpayer can’t pay the amount due because it would prevent them from covering their basic living expenses, the IRS might grant a delay of collection until the individual is able to comply. The debt remains, and penalties and interest continue to accrue, but the IRS will not pursue collection measures such as levies or garnishments.

To request a temporary collection delay, you must complete this form and provide proof of your income, expenses, and assets.

Contact S.H. Block Tax Services for Help With Your Tax Liabilities

Even if you can’t pay your tax balance in full, you should still attempt to pay as much possible so you can avoid costly penalties and interest. You should also schedule a free consultation with S.H. Block Tax Services by calling (410) 793-1231 or completing our brief contact form. We have decades of experience helping Maryland taxpayers reduce and resolve their tax liabilities, and we will work tirelessly to help you or your business get back into compliance with the IRS and/or the State of Maryland.

Over several decades serving the residents of Baltimore and the state of Maryland, we have earned an A+ rating with the Better Business Bureau by providing great service founded on accountability and trust, and by delivering that service at competitive rates. Please contact us today to learn more and take the first steps toward financial freedom.

The content provided here is for informational purposes only and should not be construed as legal advice on any subject. Please read our full disclaimer here.

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