Given the major changes to the tax law and the additional changes to the IRS withholding tables in 2018, many taxpayers may find themselves owing taxes this year. This can be due to a whole host of factors. In some cases, taxpayers don’t realize this will be the case and cannot pay the full amount owed to the IRS this April 15, 2019.
IRS Commissioner Chuck Rettig, recently stated that the organization anticipates many individuals and small businesses will owe taxes this year and may require assistance in those payments. He encourages taxpayers who have unintentionally withheld fever taxes in 2018 and may owe money, to file by the April tax deadline, pay what they can and review the options available. The IRS also strongly encourages taxpayers to review their tax withholding and ensure they have the appropriate amount marked for deduction now for the tax year 2019; as a resource, the IRS has developed a Withholding Calculator, in order to avoid a similar situation in the future.
Per the IRS website, for those that cannot pay the full amount to the IRS, the following options are available:
- Online Payment Agreement — Individuals who owe $50,000 or less in combined income tax, penalties and interest, and businesses that owe $25,000 or less in payroll tax and have filed all tax returns may qualify for an Online Payment Agreement. Most taxpayers qualify for this option, and an agreement can usually be set up in a matter of minutes. Online applications to establish tax payment plans, like online payment agreements and installment agreements, are available: Monday – Friday, 6 a.m. to 12:30 a.m.; Saturday, 6 a.m. to 10 p.m.; Sunday, 6 p.m. to midnight. All times are Eastern time.
- Installment Agreement — Installment agreements paid by direct deposit from a bank account or a payroll deduction will help taxpayers avoid default on their agreements. It also reduces the burden of mailing payments and saves postage costs. Even taxpayers who don’t qualify for a payment agreement may still pay by installment. Certain fees apply.
- Delaying Collection — If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer’s financial condition improves.
- Offer in Compromise — Certain taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an offer in compromise. To help determine eligibility, use the Offer in Compromise Pre-Qualifier
In addition, taxpayers can consider other options for payment, including getting a loan to pay the amount due. In many cases, loan costs may be lower than the combination of interest and penalties the IRS must charge under federal law.
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