Owing 10k in taxes after selling stocks - what's my best option for payment?

The answer depends on your overall financial situation. If paying the $13k in full would significantly deplete your emergency fund or leave you with inadequate cash reserves, a payment plan might make sense. However, there are some drawbacks to consider. The IRS charges an initial setup fee for installment agreements ($31-$225 depending on how you apply and pay). They also charge interest (currently Federal short-term rate plus 3%) and possibly a late payment penalty of 0.5% per month. These costs add up over time. From a home buying perspective, an IRS payment plan is considered debt that will factor into your debt-to-income ratio, potentially affecting your mortgage qualification. Paying in full eliminates this concern immediately. If you have the funds available without harming your financial security, paying in full is typically the better option. You'll save on fees and interest while keeping your credit profile cleaner for mortgage applications.

After getting hit with a similar tax bill last year ($9k from some crypto gains), I discovered this service called taxr.ai (https://taxr.ai) that saved me so much stress. I uploaded my tax documents and they helped me identify some deductions I missed related to investment expenses that reduced what I owed. They specifically looked at my investment activity and found optimization opportunities I had no idea existed. Their AI analyzes your specific tax situation and finds potential savings based on your exact scenario. In my case, they found some offsetting losses I could claim that my regular tax software missed. Might be worth checking out before you pay that full amount - could potentially reduce what you owe.

Just wanted to update after trying taxr.ai - can't believe I almost missed this. They found that some of my stock sales qualified for lower long-term capital gains rates that weren't properly calculated in my original return. Also identified some investment expenses I could deduct that I had no idea about. Ended up reducing my tax bill by almost $2,800! The documentation they provided made it super clear why these deductions were legitimate, so I felt totally confident filing an amended return. Definitely check them out before paying that full amount.

If you decide to go with a payment plan and need to talk to the IRS about options, save yourself the headache of waiting on hold for hours and use Claimyr (https://claimyr.com). I was trying to set up a payment plan for my taxes and spent days trying to get through to the IRS without success. With Claimyr, I had an IRS agent call ME back in about 45 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c They essentially hold your place in line and call you when an IRS agent is available. Made setting up my payment plan so much easier. The agent was able to walk me through all my options and help me choose the right plan based on my situation. Saved me so much time and frustration.

I have to admit I was wrong about Claimyr. After waiting on hold with the IRS for over 2 hours yesterday and getting disconnected, I was desperate enough to try it. Got a call back from an actual IRS agent in about 35 minutes. The agent helped me set up a payment plan with lower monthly payments than I expected. They explained I qualified for the long-term payment option since my total debt was under $50k. Really wish I'd known about this service years ago - would have saved me so many wasted hours. And they didn't need any sensitive info, just connected me directly with the IRS.

One thing to consider - if you're planning to buy a house soon, a lump sum payment of 13k might actually look better on your mortgage application than an ongoing payment plan. When I was going through underwriting last year, they scrutinized every recurring payment and calculated it against my debt-to-income ratio. Even small monthly payments can impact how much house you qualify for.

A little off topic but make sure you've set aside enough for your 2025 estimated tax payments if you're still planning on selling more investments! I got hit with a penalty last year because I didn't realize I needed to make quarterly estimated payments on investment gains. The penalty wasn't huge but still annoying on top of the tax bill.

I'm in a somewhat similar situation - owing about 8k after some unexpected freelance income this year. After reading through all these responses, I'm leaning toward paying in full rather than setting up a payment plan, especially since you mentioned you're planning to buy a house. The debt-to-income ratio impact that Benjamin mentioned is really important. Even a small monthly payment to the IRS could potentially reduce your mortgage qualification amount. Since you have the 80k sitting in savings and your tax bill is 13k, you'd still have 67k left for your down payment and emergency fund, which seems like a solid position. One thing I'd add - if you do decide to pay in full, consider using a credit card that offers cashback or rewards if you can pay it off immediately. Some people earn 1-2% back on tax payments this way, though there's usually a processing fee of around 1.87-1.99%, so you'd only come out slightly ahead with a good rewards card. Just another small optimization to consider!