Payment with Return Notice or Installment Agreement: What You Need to Know
When it comes to paying taxes, the IRS offers multiple options for taxpayers who can`t pay their full tax bill by the due date. Two of these options are payment with return notice and installment agreements. If you`re wondering what these options are and how they work, keep reading for an overview.
Payment with Return Notice
Payment with return notice is an IRS option for taxpayers who can`t pay their full tax bill when they file their tax return. When you file your tax return, you`ll include a payment with return notice for the amount you can pay. The IRS will then send you a notice for the remaining balance, which you`ll have to pay by a certain date. It`s important to note that the notice will include penalties and interest on the remaining balance.
If you can`t pay the full balance by the due date on the notice, you can contact the IRS to set up an installment agreement (more on this below). It`s always better to contact the IRS before the due date on the notice, as this will help you avoid additional penalties and interest.
Installment Agreements
An installment agreement is an IRS option that allows taxpayers to pay their tax bill in monthly installments. Installment agreements are typically set up for up to 72 months, although certain circumstances may allow for longer plans.
To set up an installment agreement, you`ll need to fill out IRS Form 9465, Installment Agreement Request, or use the Online Payment Agreement Application. The installment agreement will include a setup fee and interest and penalties on the unpaid balance.
The amount of the monthly payment will depend on the amount you owe and your ability to pay. You`ll need to make the monthly payments on time to avoid additional penalties and interest. It`s also important to note that the IRS can revoke an installment agreement if you fail to make the payments on time or if you don`t file your tax returns in future years.
Conclusion
Payment with return notice and installment agreements are two options available to taxpayers who can`t pay their full tax bill by the due date. These options can help taxpayers avoid additional penalties and interest and make it easier to pay their tax bill over time. It`s important to contact the IRS to set up an installment agreement before the due date on the notice to avoid additional penalties and interest.