An Installment Plan for Your Taxes
If you can't pay all the tax you owe when you file, a monthly payment plan may be the answer. The process isn't automatic and there may be alternatives, but if you're eligible, this could be the solution that gets you caught up.
Apply for a payment plan by completing Form 9465, Installment Agreement Request. This form also has details about eligibility requirements.
Generally, you may have up to 60 months to pay. But paying the full amount as soon as possible will save you money in penalties and interest. The late payment penalty is usually 0.5 percent a month, every month, up to 25 percent of the tax owed. The penalty drops to 0.25 percent a month if you filed your return on time and enter an installment agreement.
Interest rates vary because they are set quarterly. The current interest rate is 4 percent per year, compounded daily. Interest and penalties are figured on the declining monthly balance throughout the life of the payment plan.
There is also a $43 set-up fee for an installment agreement, which is taken from your first payment under the plan. |
