Tax Tip Tuesday: What to Do When You Owe Money on Your Taxes
Don’t forget — April 18th is the due date for your 2016 individual tax return.
Don't forget to file or extend your return.
Sometimes individuals don’t have cash to pay their income tax bills. This week we will examine some ways to defer paying income taxes including installment agreements.
Pay in Full in 120 Days
A taxpayer can pay the full amount owed within 120 days, without having to pay any fee for setting up an installment agreement, but interest and any applicable penalties continue to accrue until the tax is paid in full.
Taxpayers unable to pay the full amount owed within 120 days may be able to enter into an installment agreement with IRS to pay the tax. Taxpayers are eligible for a guaranteed installment agreement—in other words, IRS is required to enter into the agreement—if the aggregate amount of the liability (determined without regard to interest, penalties, additions to the tax, and additional amounts) is not more than $10,000 and:
During the past five tax years, the taxpayer (and spouse if filing a joint return) have timely filed all income tax returns and paid any income tax due, and have not entered into an installment agreement for payment of income tax.
The taxpayer agrees to pay the full amount owed within three years and to comply with all Code provisions while the agreement is in effect.
The taxpayer is financially unable to pay the liability in full when due and submits information that IRS may require to make this determination.
There are also streamlined procedures for taxpayers who owe $50,000 or less. Give us a call at 515-225-3141 to discuss if this applies to you.
We will be taking a two-week break from TTT and will be back with a new edition on Tuesday, May 2nd.
Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein