Hello, I’m Jill from Turbo Tax with some information
about paying your income tax bill in monthly installments.
Have you ever finished your tax return only to discover
that the refund you anticipated was actually a tax bill?
If this ever happens and you are unable to pay the tax in full,
you should consider requesting an installment agreement
so you can make monthly tax payments.
In order to request the installment agreement, you must be unable to pay the tax in full
within 120 days of the tax return filing deadline
or the date you receive an IRS collection notice,
and can’t currently be on an installment plan with the IRS.
The 9465 form is rather short
and only requires your personal information,
the name and addresses of your bank and employer,
the amount of tax you owe, an estimate of the monthly payment you can afford,
the day of each month you prefer your payment to be due
and the amount of any payment you choose to send with the form.
If electing to make your monthly tax payments by electronic funds withdrawal,
you must also provide your bank account and routing numbers.
The IRS will guarantee acceptance of your installment plan request
if for the previous five tax years, all of your returns were filed
and all taxes were paid on time
and you didn’t enter into an installment agreement.
In addition, your request for the installment agreement must be out of necessity
rather than preference and your
current tax debt must be $10,000 or less.
As part of the guaranteed acceptance, you cannot take more than three years
to pay off your taxes and you must agree
to comply with all tax laws for the duration of the agreement.
This means that even while you are making monthly payments,
you must ensure that you file all future tax returns
and pay your taxes by the deadline each year.
If you don’t, the IRS can cancel your
installment agreement and request full payment.
One last thing you should always remember is that an installment agreement
doesn’t eliminate late-payment interest and penalties —
it only prevents the IRS from pursuing more severe collection procedures,
such as garnishing your employment wages.
If you got a tax bill when you were expecting a refund,
try our TurboTax W-4 Calculator at TurboTax.com.
It can help you adjust your W-4 so more tax is withheld
from your paychecks to avoid any tax time surprises.
For more information about this and other tax topics, visit TurboTax.com.