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At Solvable, we care about your financial well-being and are here to help. Our research, articles and ratings, and assessments are based strict editorial integrity. Our company gets compensated by partners who appear on our website. Here is how we get compensated.
At Solvable, we care about your financial well-being and are here to help. Our research, articles and ratings, and assessments are based strict editorial integrity. Our company gets compensated by partners who appear on our website. Here is
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If you can’t afford to pay your owed income tax amount, you might be feeling overwhelmed by the thought of fines and penalties. Fortunately, working with the Internal Revenue Service (IRS) to resolve your outstanding back taxes doesn’t have to be daunting or stressful. In this post, we’ll share some of the most popular IRS payment plans and how they can provide practical solutions for conquering your upcoming tax payments.
What is an IRS Payment Plan?
An IRS payment plan is similar to other types of payment plans that allow you to pay off an existing balance or outstanding back taxes over time, as opposed to paying a lump sum immediately. Payment plans are useful when you are short on cash assets or when you need to space out the amount you give to a particular creditor each month.
Why Should I Choose a Payment Plan Option?
There are several reasons why you might choose a payment plan when working with the IRS. These might include:
Tax deductions that did not work out as you anticipated or that did not provide substantial savings on what you owe to the IRS
Changes to the tax code or to your individual income bracket that resulted in an increased tax burden at filing time
Needing additional time to come up with the cash to pay, or the desire to pay gradually
While choosing a payment plan does expand your options and provide some relief, keep in mind that securing any type of payment schedule for back taxes can actually cost more in the long run due to interest, penalties, and other fee assessments.
Working with the IRS to settle back taxes can sometimes feel confusing. That’s why many individuals turn to resources like tax hardship centers, attorneys, and certified public accountants for help. The list of payment plans below will give you a head start on figuring out which tax payment plan option is best for your personal situation.
This type of IRS payment plan is best suited to those who owe less than $10,000. There are several qualifications for this type of plan, including the fact that you must have already filed all previous returns and your ability to pay the full amount falls within 3 years.
A guaranteed installment agreement is often reserved for very simple tax payment scenarios and is usually completed online. To qualify, you must not have used this type of payment plan previously within the past 5 years.
Streamlined Installment Agreement
A streamlined installment agreement raises the cap on the amount of taxes owed to $50,000; this amount does not include any penalties or interest. To be eligible for a streamlined agreement, you must be able to pay the full amount within a 6-year timeframe.
Based on the total amount, the IRS may require direct or automatic payments that are drafted from your personal bank account. If you’d like to qualify for a streamlined plan but owe an amount higher than $50,000, you may be able to reduce the total down and then re-apply.
“Ability to Pay” Agreements
Occasionally, taxpayers owe too much to the IRS (sometimes in excess of $50,000), which requires a more specialized approach. In these cases, be prepared to work with a tax professional who can help you furnish all relevant financial details to the IRS in a timely manner.
An “ability to pay” agreement is a personalized plan that could potentially involve liens, expense limitations, and asset sales. By taking drastic measures to limit outside expenses, taxpayers show the minimum of what they can realistically offer.
If you simply cannot afford to pay your whole tax burden, the IRS may offer you a partial payment plan based on specific criteria. Because financial situations change, IRS officials assigned to your case may re-evaluate your standing every 2 years to determine eligibility.
With partial pay plans, there is typically a final deadline for repayment. Once you reach that date, you are no longer required to make additional payments.
Settlement Agreement
A settlement agreement is difficult to obtain, but it is essentially a compromise on the final owed amount for back taxes. The application for a settlement may be thorough and lengthy, but the end result is a reduced final payment amount. The average taxpayer may not be able to secure a settlement on their own, and it usually requires professional assistance.
Benefits of Payment Plans
While the best course of action is to always pay your back taxes on time and in full, sometimes that may not be realistic. A payment plan offers important benefits, such as:
An extended time frame for settling your back taxes or getting finances in order
Access to short and long-term options based on financial need
Continued contact with the IRS to avoid liens, levies, and other penalties
Options to pay as an individual, business, or Power of Attorney (POA)
Setting Up Your Payment Plan
To set up a payment plan with the IRS, you can easily apply online through the individual application. The IRS delivers immediate responses to inquiries about plans based on the personal details and tax amounts you submit. When establishing a new plan, you should be aware of:
User agreement fees
Interest and penalty charges
Administrative setup fees
Minimum monthly payment totals
Penalties for late or missed payments
You can review, change, or adjust your payment plan and transaction options at any time by visiting the Online Payment Agreement tool on the IRS website.
If you’re dealing with unresolved back taxes, there’s never been a better time to request help. Deciphering communication from the IRS can be tricky, and settling your back taxes effectively often requires outside assistance. The experts at the Tax Hardship Center can help you determine your eligibility for support and get you back on track financially.
Call today for a free case evaluation and to schedule an initial appointment with one of our tax hardship specialists.
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The personal loan offers you see on Solvable are from companies or affiliates that may compensate us. This compensation may impact where offers appear on the site, including their order, prominence, or whether a lender is featured. Solvable does not include every personal loan provider or all available offers in the marketplace.
Loan approval and terms are determined solely by the lender. You should carefully review each provider’s terms and conditions to find the option that best fits your financial situation. We make reasonable efforts to keep information up to date, but rates, fees, and terms are not guaranteed and may change at the discretion of each provider. There is no guarantee you will be approved for credit or that you will qualify for the advertised rates or terms.
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Most business funding partners in our network do not require collateral, but depending on your needs and the lender’s underwriting criteria, you may be offered other financial products. Traditional bank and SBA loans often require collateral and have more extensive approval processes.
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Student loan refinancing offers featured on Solvable are from companies or affiliates that may compensate us. This compensation may impact where and how offers appear on our site, including the order in which they appear or whether a lender is featured. Solvable does not include all student loan companies or all available refinancing options in the marketplace.
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Refinancing may help reduce your monthly payments or interest rate, but potential savings will vary depending on the interest rate, balance, and remaining repayment term of your existing loans. In some cases, refinancing may result in a longer repayment term and higher total repayment over the life of the loan—even if monthly payments are lower.
Please keep in mind:
Variable rates may fluctuate over time based on market indices like SOFR, Prime, or another benchmark rate, and may vary based on borrower qualifications and whether a co-signer is used.
Fixed interest rates may also depend on term length, credit profile, or presence of a co-signer.
All terms, rates, and product availability are subject to change at the lender’s discretion and may not be available in all states or for all types of loans.
Due to federal lending regulations, lenders are required to provide potential borrowers with certain disclosures, including an Application Disclosure and an Approval Disclosure, during the application process. Solvable is not a lender or creditor and does not originate or fund loans, nor can we alter or offer credit terms. Only the lender you apply with can provide specific loan details and required disclosures.
Please Note:
Certain federal and private loans may not be eligible for consolidation or refinancing.
Some refinancing options may eliminate borrower benefits (e.g., grace periods, income-driven repayment plans, or federal loan forgiveness eligibility).
Loans in default typically cannot be refinanced until you complete a qualifying repayment program.
Be wary of providers requesting upfront fees for student loan services.
Other financial options—like personal loans, debt relief, or consolidation—may also be worth exploring. Consult with a licensed financial or tax professional to determine what’s best for your situation.
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Home insurance offers featured on Solvable are from companies or affiliates that may compensate us. This compensation may impact how and where offers appear on our site, including whether a company is featured or the order in which it is listed. Solvable does not include all home insurance providers or all offers available in the marketplace.
Each provider sets its own underwriting criteria, and coverage availability may vary based on the age, condition, location, and value of the home. Policy terms, limits, exclusions, and pricing are determined by the insurer and may change at any time.
Solvable is not a licensed insurance agency and does not issue policies or offer insurance advice. We recommend that users:
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