IRS Taxes How to Pay and When to Pay, Longview Texas

In a situation where you have completed your tax return only to realize that you owe the Internal Revenue Service (IRS). Finding out what you owe a tax balance to the IRS is not good news, but you do have a few alternatives to pay what you owe, even if it is more than the money you currently have on hand.

Filing an Tax extension

Do not take that completed tax return and your debt to the IRS at face value, at least not if you prepared the tax return yourself. You can obtain a file extension by submitting form 4868 to the IRS. This gives you an extension until October 15th to completely review your return.

Look for deductions that you may have missed or any error in calculation that may have occurred. Consult a tax professional if you have not already done so. You may be eligible for a tax credit or a deduction that you ignored if just because you didn’t know it existed.

The main aim is to reduce your preliminary tax debt, if possible, but there is one caveat. Ideally, you should pay the entire tax balance at the time you file Form 4868 based on what you think you owe. Otherwise, you are likely to earn interest and penalties on any amount due.

Mandate as much as possible if you don’t have enough money on hand to pay the full balance owed. You will not lose any extra money you pay if your final tax bill turns out to be less than you thought it was after you spent some time finalizing your return. The IRS will send you a refund if you pay too much.

Meet the delivery time

The IRS must collect form 4868 on or before the tax filing deadline. The agency will charge you a penalty at the end of the filing, a late payment penalty and interest on any outstanding balance you owe if you don’t file your return or an extension on time and if you do not pay on time.

You will avoid the late penalty filing which is a hefty 5% of the taxes you owe for each month your return is delayed – if you file an extension; file your statement within the extended deadline in October. This jumps to $ 435 or 100% of the taxes you owe, whichever is lesser, if you are 60 days late or more.

The penalty was only $ 210 from January 1, 2018 until December 31, 2019, but First Act taxpayers increased it to $ 330, setting each community up to the Retirement Enhancement (insurance) Act ramp it back to $ 435. This penalty applies to all returns due from January 1, 2020 onwards, in other words, the 2019 tax year return that is due in July 2020.

So, file an extension and pay as much as you can, then go back to make sure that you really owe everything that you think you owe.

Payment options

Online payment can be made. You can send the IRS a paper check or you can ask the agency for a little understanding and work out paper terms if you are really experiencing financial difficulties.

The Electronic Federal Tax Payment System

The Electronic Federal Tax Payment System (EFTPS) is a web service operated by the Treasury Department for processing federal tax payments. You must set up a profile account with your bank account information, but then you can make payments for various tax obligations, estimated taxes, including extension payments, or tax balances even for previous years. 

You can schedule an advance payment, and it will be automatically withdrawn from your bank account on the designated date.

Direct IRS Pay 

The IRS also offers Direct Pay, a similar web service. The website does not maintain your bank account or personal information so you will have to re-enter all of this data whenever you want to make a payment.

You can go back and change or cancel a payment up to two business days before the pay-on date, if you schedule payment for a date in the future.

US Postal Service 

You can also send your money to the IRS in a good, old-fashioned courier way-just a check. The IRS has several addresses for payments, depending on the nature of the payment and where you live. You can find a list of addresses on the IRS website to help identify what you should be using.

Define a payment plan

The IRS offers payment options if you cannot pay all or nothing at once. The essential thing is that you don’t just ignore your situation, hoping that it will go away, because it won’t. 

You can set up a monthly payment plan with the IRS, called an installment agreement, if you find it difficult to pay part or all of your balance. This allows you to pay what you owe over time. You can even decide how much you want to pay per month, at least to some extent. The balance has to be paid within 84 months, so your minimum payment would be what you owe divided by 84.

The seven-year time period was also affected by the First Act Contributor. It has been extended from five to seven years.

Leave some room for interest, penalties and fees when you are doing your calculations.

The IRS will still charge the late fee, as well as the interest, and there is a one-time processing fee to set up the plan – $ 149 from 2020, but this reduces to just $31 if you apply for the online installment agreement and agree to have the monthly amount taken from your bank account by direct debit. Direct debit is required if you owe more than $ 25,000.

You do not necessarily have to qualify for the installment agreement by submitting a collection information statement to prove your assets and credibility, at least not if you owe less than $ 50,000. You can apply online using the online application payment agreement on the website of the IRS.

 

 

Other Options

Depending on your credit and how much you owe, you may want to look for private loan options if you cannot pay within the tax term. You may be able to obtain a personal loan at an interest rate that is less than the penalties combined with the interest that the IRS would access. This would allow you to pay your tax debt and avoid any payment plan with the IRS.

The First Law taxpayer also allows the IRS to collect payments by credit or debit card from 2020. Constantly check the IRS, EFTPS, and Direct Pay website periodically to find out when this option becomes officially available.

Seek the advice of a professional to assess other ways to resolve your tax debt if you cannot afford to pay your authorized tax monthly tax debt or if you owe more than $ 50,000. The IRS also put into consideration escrow offers where they might be willing to accept an amount less than what you owe in some cases, or may postpone payments like the IRS Taxes until you get back on your financial feet.