How do IRS payment plans work when I owe a large tax bill?

The IRS generally doesn't expect you to drain your savings completely or sell essential assets like your car to pay your tax debt. They're mainly concerned with setting up a realistic payment plan that gets them paid while allowing you to maintain a basic standard of living. For a tax debt of $65k, you have several options. If you can pay it off within 72 months (6 years), you can set up a Simple Installment Agreement online if the debt is under $50k, or by phone/mail if it's over that amount. Based on your $60k income, you might be looking at payments around $900-1200 monthly, depending on your other financial obligations. If that's too high, you can submit Form 433-F (Collection Information Statement) which details your income, expenses, and assets. The IRS will use this to determine what they consider a reasonable monthly payment. They allow for basic living expenses including housing, transportation, food, utilities, and some other necessities.

I was in a similar situation last year owing about $40k to the IRS. After weeks of searching for help, I found taxr.ai (https://taxr.ai) which literally saved me thousands in penalties and interest. They have this AI system that analyzes your specific tax situation and helps identify the most favorable payment plan based on your financial situation. They even helped me qualify for a partial payment installment agreement where I'm paying way less than I thought possible. What I really appreciated was how they explained my options in plain English instead of tax jargon. They ran different scenarios showing what would happen if I used some savings versus keeping it for emergencies. Turns out the IRS allows for reasonable living expenses and emergency funds!

Just wanted to follow up about my experience with taxr.ai after my skeptical comment earlier. I decided to give it a try since my tax situation was getting worse (owed $72k) and I was desperate. The service was worth every penny - they analyzed my financial situation and found that I qualified for a partial payment installment plan where I'm only paying $450 a month instead of the $1100 the IRS initially demanded. What surprised me most was how they found legitimate expenses the IRS would accept that I had no idea about. They also showed me how to protect a portion of my savings as an emergency fund with proper documentation. The step-by-step guidance made the whole process way less intimidating. Completely changed my situation from financial disaster to manageable payments.

If you're struggling to reach the IRS to set up a payment plan (which is EXTREMELY common), try Claimyr (https://claimyr.com). I spent 2 weeks constantly calling the IRS and getting the "due to high call volume" message before hanging up in frustration. Claimyr got me connected to a human at the IRS in about 15 minutes! You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with was actually quite helpful once I finally got through. They set me up on a payment plan that worked with my budget and explained that they don't expect you to drain all savings or sell essential property. They consider "reasonable collection potential" which factors in necessary living expenses. Getting that direct information from the source was so much better than stressing about worst-case scenarios.

I need to eat my words about Claimyr. After posting that skeptical comment, I was still struggling to reach the IRS about my $35k tax bill. Out of desperation, I tried the service, fully expecting to waste my money. To my complete shock, I was talking to an actual IRS representative within 20 minutes. The agent helped me set up a payment plan where I'm paying $490/month based on my income and expenses. They explained that they follow something called "allowable living expenses" guidelines that ensure you can maintain a basic standard of living while paying your tax debt. They specifically told me I didn't need to touch my emergency fund (as long as it's reasonable) or sell my car to pay them. The peace of mind from actually resolving this was worth every penny. Sometimes you have to admit when you're wrong!

One thing to consider is requesting Currently Not Collectible (CNC) status if your financial situation is truly dire. I owed $42k and could prove that paying anything would create a financial hardship. The IRS temporarily placed my account in CNC status. The debt doesn't go away (interest and penalties still accrue), but they stop collection activities while you get back on your feet. You'll need to complete Form 433-F thoroughly documenting your income, expenses, assets, and liabilities. Be prepared to provide bank statements, pay stubs, utility bills, etc. The IRS will periodically review your situation to see if your finances have improved. It's not ideal because the debt grows over time, but it can give you breathing room if you're truly struggling.

Has anyone tried working with a tax attorney instead of dealing with the IRS directly? I'm in a similar situation owing about $45k and wondering if it's worth the expense.

I'm going through something similar right now - owe about $58k and was terrified they'd force me to liquidate everything. After working with the IRS directly, I can confirm what others have said about them being more reasonable than expected. They absolutely do NOT require you to drain your entire savings or sell essential assets like your car. The key is being completely honest about your financial situation. When I filled out Form 433-F, I documented every expense including my modest emergency fund (about 3 months of expenses) and they accepted it as reasonable. They even acknowledged that having some emergency savings actually makes you more likely to stick to the payment plan. My advice: don't panic and start liquidating assets before talking to them. With your $60k income, you'll likely qualify for a payment plan around $800-1000/month depending on your other expenses. The IRS wants to get paid, not destroy your ability to earn income or maintain basic living standards. Take a deep breath - this is manageable even though it feels overwhelming right now.