HERE 10 tips if you cannot immediately pay your liabilities to the IRS:
• Pay What You Can: Pay promptly to stop additional penalties and interest from accruing. If you are unable to pay, consider getting a loan to pay the bill in full rather than make installment payments to the IRS.
• Additional Time to Pay: If you are unable to pay, request for a payment plan.
• Installment Agreement: You may request an installment agreement but you have to be current with filing and paying requirements. File all required returns for the past years and pay estimated taxes for the current year.
• Form 9465: Complete and mail an IRS Form 9465 (Installment Agreement Request) along with your tax return or bill (use return envelope supplied by the IRS).
• Collection Information Statement: If you owe more than $50,000, you will be required to complete Form 433-F (Collection Information Statement).
• Online Payment Agreement: If you owe $50,000 or less in combined taxes, penalties and interest, you can request an installment agreement using the Online Payment Agreement application at www.irs.gov.
• Credit Card Payments: You can pay your bill with a credit card. The interest rate on a credit card may be lower than the combination of interest and penalties imposed by the Internal Revenue Code. Contact one of the following processing companies: Link2Gov, www.pay1040.com, RBS WorldPay, Inc, www.payUSAtax.com, or Official Payments Corporation, www.officialpayments.com/fed.
• Electronic Funds Transfer: Use the Electronic Federal Tax Payment System by either calling 800-555-4477 or using the online access at www.eftps.gov.
• User fees: If an installment agreement is approved, a one-time user fee is charged.
• TIP: Reduce the Number of Withholding Exemptions at Work: If you want to prevent future nightmares, reduce your exemptions at work. Submit a new W-4 (Employee’s Withholding Allowance Certificate) to accounting. Example: Go from M-2 (married with two dependents) to M-0 or even S-0 (Single with no dependent). Your employer will withhold a little more each payday but this will alleviate your tax problems when you file. You don’t claim your dependents at work but you’ll deduct exemptions for all dependents when you file. Result is either less tax due or more refunds. Try it.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at email@example.com.