Whats an Installment Agreement

/Whats an Installment Agreement

Whats an Installment Agreement

An installment agreement is a payment plan that allows the taxpayer to pay their taxes owed to the IRS over time. It is an option for taxpayers who are unable to pay their entire tax bill by the due date.

Taxpayers who owe less than $50,000 in taxes, penalties, and interest can qualify for an installment agreement. There are two types of installment agreements: guaranteed and streamlined.

A guaranteed installment agreement is available to taxpayers who owe less than $10,000. To qualify, the taxpayer must have filed all of their tax returns, have not entered into an installment agreement in the previous five years, and agree to pay their taxes within three years.

A streamlined installment agreement is available to taxpayers who owe less than $50,000 and can pay their taxes within six years. However, the taxpayer must agree to make monthly payments and cannot have previously defaulted on an installment agreement.

To apply for an installment agreement, taxpayers can fill out Form 9465 and submit it to the IRS. The taxpayer must also include a proposal for the installment agreement, including the amount of the monthly payment and the length of the payment term.

Once the IRS accepts the installment agreement, the taxpayer must make monthly payments on time. If the taxpayer misses a payment, the installment agreement can be terminated, and the taxpayer will owe the full amount of taxes, penalties, and interest.

In summary, an installment agreement is a payment plan that allows taxpayers to pay their taxes owed to the IRS over time. It is an option for taxpayers who are unable to pay their entire tax bill by the due date. To apply for an installment agreement, taxpayers must fill out Form 9465 and submit a proposal for the payment plan. It is essential to make monthly payments on time to avoid defaulting on the installment agreement.

By |2021-11-03T05:10:05+00:00November 3rd, 2021|Uncategorized|