Are you lagging behind on your tax payments and struggling to pay your taxes on time? If the answer is a resounding ‘yes’, then you must hurry up and get ready to reach an installment agreement with the IRS. You have a few options to consider while going for an installment agreement to repay your IRS tax debt. Read on to know more explicitly in this regard.
What is streamlined installment agreement?
If you are enrolled in a streamlined installment agreement, you won’t have to fill out the form 433-F which otherwise the IRS requires to scan through your current financial situation. To qualify for a streamlined installment agreement you have to meet other requirements as well. For example your IRS tax balance must be more than 25,000 USD and you should also agree to pay off the owed amount within a 60-month time period. Remember, in this type of agreement, the IRS accepts an amount that shouldn’t be less than the debt balance divided by 50.
What is guaranteed installment agreement?
If you owe less than 10,000 USD to the IRS, guaranteed installment agreement can be your viable debt solution. However you have to fulfill other eligibility criteria as well. You have to be in agreement that you’ll file and pay your taxes right on time for the forthcoming tax years and your monthly installments should be enough to pay back the owed amount within next 36 months from the time of the agreement. Remember, the IRS won’t approve the agreement in any way if you have filed another installment agreement within the past 5 years.
What is Partial payment installment agreement?
In case you monthly income falls short to cover the minimum payments as per the guaranteed or streamlined installment agreement, you should go for Partial payment installment agreement. Here you have to make monthly payments as per your affordability and convenience and you generally get a longer time period to pay your bills. However, in this type of agreement, the IRS will reassess your terms of agreement after every 2 years and verify whether you can afford to pay more or not.
To conclude, no matter what tax debt solutions you choose, unless and until you form a budget and manage your personal finances well, you can’t get rid of the outstanding tax debt balance within the stipulated time period as required by the agreement.