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Paying taxes when you can't afford the full amount

If you are dreading another tax season because you have not paid last year's taxes yet, you are not alone. Many Missouri residents are caught off guard when they find out they owe Uncle Sam money they do not have. You may also have a healthy fear of the IRS, and rightly so. The federal government has power and license that most other debt collectors do not.

The worst thing to do when you owe money for taxes is to ignore the problem. The government does not give up easily, and the IRS will eventually claim what you owe one way or the other. Fortunately, the IRS also offers many options for people who cannot pay the full amount of tax debt they owe. You may qualify for one of these programs.

Qualifying for an installment plan

Like paying off any large debt, it helps if you can break it into smaller payments, and the IRS provides these options for those who meet certain standards. Depending on your circumstances, you may qualify for one of these programs:

  • Guaranteed installment plan: If you owe the IRS $10,000 or less, the agency will usually agree to accept you into this plan. You must be able to pay the full debt within 36 months and have no other installment plans within the last five years.
  • Streamlined installment plan: You may qualify for this plan if you owe $50,000 or less and have the resources to repay the debt within 72 months.
  • Partial payment installment: This program is based on your income, living expenses and other factors. The IRS closely monitors those in this program, and the agency may ask you to sell some of your assets to pay your tax bill.
  • Non-streamlined installment plan: For this program, you will have to negotiate a payment plan that fits your circumstances. It is difficult to gain acceptance for this plan, and you may benefit from legal assistance as you negotiate.

The guaranteed and streamlined plans have the added protection from IRS liens or levies. However, all the programs require that you file all tax returns that are due and agree to do so in the future. Failure to file future tax returns or to make your installment payments on time may result in the IRS removing you from the program and demanding full payment of what you owe. Nevertheless, if you are successful in gaining acceptance into an installment program, you may find your tax burden much more manageable.

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Ste. Genevieve Office
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