Tax day is upon us once again. You have probably already completed your taxes, but if you haven’t, you have until midnight tonight to file. With certain tax deductions being phased out, you may have ended up getting less back than you expected, or possibly even owing taxes. If you do owe taxes, there are five ways in which you can pay your tax bill. But what do you do when the tax bill is higher than expected? Well, if you don’t have the money in the bank to write out the check and send in today, you do have options. The Internal Revenue Service offers you a few choices when you are faced with a tax bill that you cannot pay up front:
1. Installment Agreement
This allows you to pay your taxes over time, if you qualify (visit IRS.gov for further details or contact your tax professional). You can apply online if you owe $50,000 or less in combined individual income tax, penalties and interest; or complete and mail Form 9465, Installment Agreement Request.
2. Offer in Compromise
Allows you to settle for less than you actually owe, if you meet strict requirements. It may be a valid option if you are unable pay your full tax liability, or doing so would create a financial hardship. To see if you qualify to make an offer for less than you owe, fill out the online questionnaire. If you qualify, a one-time lump some may be accepted, or an installment can be set up. Factors that are considered for each unique circumstance:
- Ability to pay
- Asset equity
Some important factors to remember when selecting either of these options: All required tax returns must be filed, any future tax refunds will be applied to the amount you owe until the tax debt is fully paid, and there are fees and interest involved in setting up an installment agreement.
Of course, if you are able to pay now, there are options besides just sending in a check with your tax return. The government will also accept:
3. Money order
4. Debit or credit card
5. Electronic payment—(Electronic Federal Tax Payment System) You must enroll in EFTPS where you can provide your payment electronically and securely.