Set up IRS Payment Plan
Just because you can’t pay your tax bill right now doesn’t mean you shouldn’t file your taxes. This is a super common scenario taxpayers find themselves in and luckily the IRS (and most states) offer payment plan options. This allows you to pay off your tax bill over time similar to paying off a credit card (yes, with interest).
While Prisma Tax Group doesn’t set up payment plans directly we can guide you on how to set one up for yourself.
First you need to file your taxes and make sure they’re accepted by both the IRS and your state. The IRS can take up to 8 weeks to update its records so if you log into your IRS portal immediately after filing your balance may not show up yet. That doesn’t mean you can’t make payments! You can still use IRS Direct Pay right away.
How to Make a Payment Using IRS Direct Pay:
If your amount due isn’t showing in your IRS account, you can still make a payment via IRS Direct Pay. Just follow these steps:
Reason for Payment: Select “Balance Due”
Apply Payment To: Choose “Income Tax - Form 1040”
Tax Period for Payment: Select the tax year and type in the amount (located on your tax return).
From there, the IRS offers two main payment plan options. For a short-term payment plan, if you owe less than $100,000 in combined tax, penalties, and interest, you may qualify for up to 180 days to pay it off. For a longer-term payment option (Installment Agreement), if you owe $50,000 or less and have filed all necessary returns, you can set up a plan to spread your payments over more than 180 days.
Before applying for any payment plan, make sure you have everything ready. This includes your Social Security Number or ITIN, date of birth, filing status, mailing address from your latest return, email address, and payment details like a bank account or card. Most taxpayers will qualify and you can easily apply online through the IRS Online Payment Agreement tool. You can also set up or adjust a plan over the phone by calling the IRS at 800-829-1040.
There is no set up fee for short term plans but just keep in mind the interest continues to accrue until paid. Long-term plans may have a setup fee but low-income taxpayers may qualify for reduced or waived fees. Payments can be made through direct debit, payroll deduction, or other methods based on your preference.
Don’t forget about your state! If you owe state taxes each state handles their own payment plans so you'll need to contact your state for a separate payment plan.