If you find out that you can’t pay the full amount of taxes you owe, don’t panic. You need to still file your return and pay as much as possible through the April 17 deadline so that you can steer clear of penalties and interest. It’s also advisable to contact the government to ask about payment options. Listed below are alternative payment options you might want to consider plus a tip on penalty relief underneath the IRS’ New starting Initiative:
1. By Getting An Installment Agreement
You can apply for an IRS installment agreement using Online Payment Agreement at the IRS website. This web-based application allows taxpayers who owe $50,000 or less in combined tax, penalties and interest to self-qualify, apply for, and receive immediate notification of approval. You could also request an installment agreement before your existing tax liabilities are assessed by utilizing OPA. The OPA option gives you a straightforward and convenient method to establish an installment agreement, eliminates the requirement for personal interaction with IRS and reduces paper processing. You could even complete and submit a Form 9465, or Form 9465-FS, Installment Agreement Request, make your request in writing, or call 800-829-1040. For balances of more than $50,000, you are required to file a financial statement to look for the monthly payment amount for an installment plan. You could steer clear of the filing of a federal tax lien by setting up a direct debit installment repayment schedule.
2. Penalty Relief
To assist those most in need, a six-month grace period after the late-payment penalty can be obtained to a certain wage earners and self-employed individuals. You can obtain approval for a six-month extension if:
– your revenue is inside certain limits and;
– your request is received by April 17, 2012; and
– your 2011 tax, interest and any other penalties are paid entirely by Oct. 15, 2012.
To discover if you are eligible and to apply for the extension and penalty relief, complete and mail Form 1127-A, Application for Extension of Time for Payment of revenue Tax for 2011 Due to Undue Hardship.
3. Pay By Debit Or Credit Card
You may use all major cards (Visa, Discover, MasterCard or American Express) to pay for your federal taxes. There is no IRS fee for credit or debit card payments. If you’re paying by credit card, the service providers charge a convenience fee based on the amount you happen to be paying. If you’re paying by debit card, the providers charge a set fee. Don’t add the benefit fee or flat fee to your tax payment.
4. More time to Repay
Based on your circumstances, you might be granted more time to pay for your tax. Additional amount of time can be requested using the Online Payment Agreement application at www.IRS.gov or by calling 800-829-1040. There’s no fee for this short extension and taxpayers who request and are granted an extra 60 to 120 days to pay for the tax can pay less in penalties and interest than if the debt were repaid by way of an installment agreement through a larger time period.
If you have additional questions about tax preparation please visit our website at Cohesive Tax. You can also contact us now and let us help prepare you for the future. Also on our website you can contact a skilled personnel tax preparation business advisor and/or Enrolled Agents who will help you with all the tools you need for tax preparation.