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Paying Tax by Installment Agreement

If you have a balance of tax due on line 76 and cannot pay all or part of it with your tax return, you can ask for an installment agreement which will allow you to make monthly payments of the amount you owe. Even if you cannot pay, you must still file your tax return on time.

Do not confuse these installment payments, which are for a balance due for the prior tax year, with the installment payments for your estimated tax for the current tax year.

Paying Tax by Installment Agreement

How to request an installment agreement?

To request an installment agreement, file Form 9465, Installment Agreement Request, with your tax return.

On Form 9465, you must enter:

  • the total amount you owe,
  • the amount of the payment you are making with the tax return, and
  • the amount of the payment you will make each month.

You usually receive a response within 30 days. However this may take longer if you file your tax return after March 31.

Is there a fee for requesting an installment agreement?

If your request is approved, the IRS will charge you a $105 fee ($52 if you make payments by electronic funds withdraw). If your income is below a certain level, you may qualify to pay a reduced fee of $43. Do not include the fee with the Form 9465. After approving your request, the IRS will bill you for the fee with your first payment.

Interest and penalties

In addition to the fee you will be charged interest for the balance due payments and you may be charged a late payment penalty on the amount not paid by the income tax due date. Because interest and penalties are charged until the entire balance is paid in full, you should pay as much as you can with your tax return and make your monthly payments as large as possible.

Will the IRS reject my request for installment agreement?

Your request for an installment agreement cannot be turned down if the tax you owed is not more than $10,000 and all three of the following apply:

  1. During the last 5 years, you have filed all income tax returns on time and paid any income tax due, and have not entered into a previous installment agreement for the payment of tax.
  2. The IRS determines you cannot pay the tax owed in full when it is due and you give the IRS any information needed to make that determination.
  3. You agree to pay the full amount you owe within 3 years and to comply with the tax laws while the agreement is in effect.

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