Episode 10: In this episode, Timalyn discusses installment agreements related to your tax payments. She'll explain how to set them up with the IRS when you can't pay your taxes in full. Grab your pen and paper and let's get started.
Interesting Facts
Did you know, according to a recent study by Amplify Media, Apple podcasts features over 2 million podcasts? However, 26% of those only have 1 episode. Of the 2 million+, 64% of them have fewer than 10 episodes. For this reason, Timalyn is pretty excited to be launching her 10th episode today. If you are new to this podcast, feel free to visit the website and listen to previous episodes.
What Is an Installment Agreement?
An IRS installment agreement is a payment arrangement between you and the IRS. If you are a qualified taxpayer, you can set it up or it can be handled by your authorized representative. Your representative must have Form 2848, Power of Attorney and Declaration of Representative on file with the IRS. . An authorized representative is empowered to negotiate, on your behalf, with IRS. This is what Timalyn does when she steps into her client's shoes.
You Must be Compliant
A qualified taxpayer is a compliant taxpayer. This means your tax returns for prior years have been filed and you are making payments on the current tax year. This is through paycheck withholding or for business owners, which means filing your quarterly, estimated tax payments. In Episode 2, Timalyn discussed the importance of getting the missing returns filed. Timalyn also addressed compliance in Episode 8.
Owe $10,000 in Taxes or Less?
If you owe $10,000 or less in taxes, have no missing tax returns, haven't defaulted on a previous tax plan during the past 5 years and could pay off the tax debt in 36-months, you may qualify for a guaranteed installment agreement.
Timalyn has written an e-book with step-by-step instructions on how to set up a Guaranteed Payment Plan. You can click here to purchase this e-book via her website.
If you owe the IRS more than $10,000, keep listening.
Interest Accrues on Your Installment Agreement
You may be exposed to interest and penalties on the balance of your tax debt. In Episode 7, Timalyn explained the importance of tax transcripts. These may help you to get some of the penalties removed.
How to Apply for Your Installment Agreement
You will use IRS Form 9465 to begin the process. There is a significant IRS backlog, so Timalyn doesn't recommend filing tax forms on paper. Rather, you should consider filing electronically. The Form can be filed along with your tax return.
Timalyn walks you through completing IRS Form 9465, step by step in the video IRS Installment Agreement.
Is There a Cost to Set Up an IRS Installment Agreement?
Timalyn explains there's a $31 monthly fee to set up the plan. Also, you will still accrue penalties and interest, until the balance is paid. Low-income taxpayers may be eligible to have the $31 fee waived.
Note, that the IRS will take the $31 monthly fee based on a debit card installment agreement for your bank account or as a payroll deduction. The direct debit method is usually required if your balance is $25,000 or more.
Owe the IRS $25,000 or More?
If you decide not to set up a direct debit installment agreement, the IRS may file a tax lien to make sure you don't try to avoid paying them. You'll also pay a higher set-up fee. The non-direct debit installment agreement setup fee is $130, plus the penalties and interest accrued. Low-income taxpayers will pay a fee of $43, instead of $130.
Avoiding a Revised Payment Plan Fee
Timalyn explains the importance of setting up the plan correctly. You want to avoid submitting the wrong information about your address or other information. There is a $10 fee to correct it. If you change your bank account, there's a $10 fee. Bottom line, make sure you thoroughly review your paperwork before submitting it to the IRS.
Streamlined Installment Agreement
What if you owe more than $10,000 and you don't qualify for a guaranteed installment agreement? If you can pay off your tax debt in full over 72 months, you can qualify for a streamlined installment agreement.
As long as the Collection Statue Expiration Date (CSED) doesn't expire before the 72-month period you should not have to submit your financial information. Timalyn explains the importance of your CSED when negotiating with the IRS in Episode 7. However, to avoid having to submit your financials, your tax debt must be lower than $50,000.
Remember, if you owe between $25,000 and $50,000, you still may have to deal with an IRS tax lien, if you don't have a direct debit installment agreement in place.
Owe $50,000 or more to the IRS?
You can still set up an arrangement, but you'll be required to submit your financial information. It's now more complicated. You'll be required to submit IRS Form 433-F Collection Information Statement.
Owe the IRS $100,000 or more?
This situation is even more complex, but it can be done. Timalyn works with people in this situation. The IRS will require your financial information. This includes your financial investments and business assets. You'll use IRS Form 433-F to show how much you can afford to pay the IRS.
Remember, back taxes don't have to ruin your life.
You Don't Have to Do This Alone
If you'd like to speak with Timalyn and her team about your specific situation, visit www.BowensTaxSolutions.com . Penalties, interest, and other fees are building. Don't wait to address your tax issues.
As we conclude Episode 10, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Google Podcasts, Spotify, and many other podcast platforms.
Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.
For more information about tax relief options, visit https://www.americasfavoriteea.com/ .
If you have any feedback, or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.
Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.
