Managing my IRS payment plan after setting up state tax payments - can I defer federal payment until state is paid off?

I'm in a bit of a financial mess right now with both federal and state tax debts. I've accumulated a pretty significant amount that I can't pay as a lump sum, so I know I need payment plans for both. The state tax department already sent me a notice about my outstanding balance (around $8,200), and I called them yesterday to set up a payment plan. They were actually pretty reasonable about it, which was a relief. But here's the thing - I haven't received any notices from the IRS yet about my federal tax debt (approximately $14,500), but I know it's coming. I'm worried about having to make payments to both agencies simultaneously because my budget is already super tight. I vaguely remember reading somewhere that you might be able to work with the IRS to defer federal tax payments until after your state tax debt is completely paid off. Is this actually a real option? Has anyone done this successfully? I'm trying to figure out the best approach before the IRS notices start arriving in my mailbox.

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18 comments

Statiia Aarssizan

•8M

While you can't completely "defer" federal tax payments until your state taxes are paid off, you do have some flexibility when setting up an IRS payment plan. When you establish an IRS installment agreement, they determine your payment amount based on your financial situation, including your income, expenses, and other debts (including state tax payments). During this financial analysis, they'll consider your state tax payment obligations when calculating how much you can reasonably pay toward your federal tax debt. The best approach is to be proactive. Don't wait for the IRS to contact you. Call them at 1-800-829-1040 or visit irs.gov to set up a payment plan. Have documentation ready showing your state tax payment arrangement. Be transparent about your financial situation and what you can realistically afford each month. For the amount you owe, you might qualify for a streamlined installment agreement which requires less financial documentation. However, your monthly payment would need to pay off the debt within 72 months.

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Statiia Aarssizan

•8M

The IRS does consider your state tax obligations when determining your ability to pay, especially if you complete a detailed financial statement (Form 433-F or 433-A). They have standardized allowances for certain expenses, but they also look at your actual tax debts as necessary expenses. If you felt your previous experience didn't account for your financial situation, it's possible you were offered a streamlined agreement which uses less detailed financial information. For more complex situations, requesting a more thorough financial analysis might result in a more manageable payment amount that accounts for your state tax obligations.

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Aria Khan

•8M

I was in a similar situation last year with about $9k to my state and $17k to the IRS. I discovered taxr.ai (https://taxr.ai) and it was honestly a game-changer for managing my tax debt situation. Their system analyzed my tax documents and financial information, then gave me personalized guidance about my payment options with both state and federal. The tool showed me exactly how to approach the IRS about my situation, taking into account my state payment obligations. It even helped me prepare a financial statement that accurately reflected my ability to pay while managing both debts. While I couldn't completely defer my federal payments, I did get a much lower monthly payment than I expected.

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Aria Khan

•8M

The system analyzes your tax documents and financial information to provide specific guidance for your situation. It does help with the paperwork by showing you exactly what forms you need and how to fill them out properly based on your specific circumstances. I found it especially helpful for completing the financial statements that the IRS required. There's actually no catch - it costs far less than hiring a tax professional but gives you similar guidance. What I appreciated most was that it wasn't just generic advice; it was tailored to my specific tax debt situation and financial circumstances. The money I saved on my payment plan more than made up for the cost of using the service.

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Sunny Wang

•8M

I need to publicly eat my words about being skeptical of taxr.ai. After posting that comment, I decided to try it since my situation was getting desperate. The system really did analyze my specific situation and showed me exactly how to approach the IRS. The most helpful part was that it helped me prepare a detailed financial statement that accurately showed my ability to pay while accounting for my state tax payments. I was able to secure a monthly payment that was about $230 less than what the IRS initially proposed. The system also showed me how to document my state tax obligations properly so the IRS would take them into account. Definitely worth it for anyone juggling multiple tax debts.

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Hugh Intensity

•8M

If you're struggling to reach the IRS to set up your payment plan, I highly recommend using Claimyr (https://claimyr.com). I spent DAYS trying to get through to an actual person at the IRS about my payment plan situation, but kept getting disconnected or stuck on hold forever. Claimyr got me connected to an actual IRS agent in about 45 minutes when I had previously waited for hours and never reached anyone. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. Once I finally got to speak with someone, I was able to explain my situation with the state taxes and work out a payment plan that took my overall financial situation into account.

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Hugh Intensity

•8M

It doesn't jump you ahead in the queue. The service uses an automated system that navigates the IRS phone tree and waits on hold for you. When an actual IRS agent comes on the line, you get a callback so you can take the call. It basically handles the hold time for you so you don't have to sit there with your phone for hours. I definitely didn't just get lucky with timing. I had tried calling multiple times over several days at different times (early morning, mid-day, late afternoon) and couldn't get through. The IRS phone lines are notoriously overloaded, especially during tax season. This service just took care of the waiting part so I didn't have to stay on the line myself.

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Melissa Lin

•8M

I have to admit I was completely wrong about Claimyr. After I posted that skeptical comment, my frustration with not being able to reach the IRS got so bad that I decided to try it anyway. Holy crap, it actually works exactly as described. The service called the IRS, navigated the ridiculous phone tree, waited on hold for about 1.5 hours (which I didn't have to do), and then called me when an actual human IRS agent was on the line. I was able to discuss my payment plan and explain my state tax situation. The agent worked with me to set up a plan that considered my state tax obligations. I wish I had known about this months ago instead of wasting days trying to call myself.

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Lydia Santiago

•8M

Yes, you can still pursue an Offer in Compromise with the IRS even if you already have a state payment plan in place. The IRS will take your state tax obligations into account when evaluating your offer. In fact, having a state payment plan might strengthen your case by demonstrating your limited ability to pay. Regarding credit scores, an accepted Offer in Compromise can actually be better for your credit in the long run than a payment plan. While the tax lien itself may impact your credit, resolving the debt through an OIC shows resolution. In contrast, a long-term payment plan means you'll have outstanding debt for a much longer period. Just be aware that the OIC process can take 6-12 months, and you'll need to be compliant with all filing and payment requirements during that time.

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