Owing $6,000 in taxes this year - can I set up an IRS installment plan?
This tax season I'm looking at a much bigger bill than I'm used to. For the past several years I've owed around $800-1000 which I just paid in full when filing. But this year I'm going to owe the IRS about $6,000 and honestly I don't have that kind of cash sitting around right now. My hours got cut at work last fall and I had some side income from freelancing that didn't have any withholding. Plus I cashed out some investments earlier in the year and didn't set anything aside for taxes (lesson learned the hard way). I can probably scrape together maybe $1,500 to pay upfront, but I'm wondering if the IRS will let me do an installment plan for the rest? Has anyone done this before? What kind of monthly payment would I be looking at for the remaining $4,500 or so? And do they charge interest or fees for paying over time? I'm planning to file on time, I just can't pay the full amount all at once. Any advice would be really appreciated!
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Ryder Ross
Yes, you can absolutely set up an installment plan with the IRS! I'm a tax preparer and help clients with this situation all the time. The most important thing is to file your return on time even if you can't pay in full - this avoids the failure-to-file penalty which is much higher than the failure-to-pay penalty. For amounts under $10,000, the IRS has a guaranteed installment agreement option where you can take up to 36 months to pay. You'll apply using Form 9465 or you can apply online through the IRS website after you file. If you can pay it off within 180 days, you might qualify for a short-term payment plan with lower fees. For a $6,000 balance, expect to pay around $180-200 per month on a 36-month plan, plus there's a setup fee (reduced if you opt for direct debit). The IRS also charges interest (currently about 7%) plus a late payment penalty of 0.25% per month on the unpaid balance when you're on an installment plan.
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Gianni Serpent
•Do you need to wait until after you file to set up the payment plan? Or can you do it while filing? I'm using TurboTax and wondering if I should just set it up through there when I submit.
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Henry Delgado
•What about if OP pays $1,500 upfront like they mentioned? Would that change the monthly payment a lot? And does it matter what caused the tax debt in the first place?
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Ryder Ross
•You can set up the installment plan when you file or after you file. Most tax software programs like TurboTax give you the option to apply for an installment agreement during the filing process, which is convenient. You'll still need to complete Form 9465 as part of your tax return. If you pay $1,500 upfront, that would reduce your balance to $4,500, making your monthly payment around $135-150 on a 36-month plan. The cause of the tax debt doesn't matter to the IRS for standard installment agreements - they just want their money. The only exception would be if you're claiming financial hardship and requesting an Offer in Compromise, which is a different process altogether.
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Olivia Kay
After facing a similar situation last year ($8k tax bill from freelance work), I discovered taxr.ai (https://taxr.ai) and it really helped me understand my payment options. Their system analyzed my tax docs and showed me exactly how much I'd save by making a partial payment upfront vs. financing the full amount. The coolest part was that it confirmed I qualified for the guaranteed installment plan and calculated what my monthly payments would be with different down payment amounts. It also showed me the total interest and penalties I'd end up paying over the life of the plan, which helped me make a better decision about how much to pay upfront.
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Joshua Hellan
•Does this tool actually connect to the IRS or just give estimates? I'm suspicious of anything claiming to interface with the IRS directly.
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Jibriel Kohn
•I've never heard of this before. Is it free to use or do they charge? Their website isn't super clear about pricing.
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Olivia Kay
•It doesn't connect directly to the IRS - it analyzes your tax situation and shows you options based on current IRS rules and interest rates. It's more like a sophisticated calculator and document analyzer that helps you understand your specific situation rather than giving generic advice. They do charge for the full analysis, but they offer a free preliminary assessment that shows you basic options. I thought it was worth it because it helped me determine exactly how much to pay upfront to minimize my total costs over time, and the interface walks you through exactly how to set up the payment plan with the IRS.
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Jibriel Kohn
Just wanted to follow up and say I tried taxr.ai after asking about it here. I was skeptical at first but it was actually super helpful! I uploaded my tax forms and it showed me that by paying $2,000 upfront instead of the $1,000 I was planning, I'd save about $240 in interest and penalties over the life of my payment plan. It also walked me through filling out Form 9465 correctly and showed me exactly what to expect for monthly payments. The timeline feature really helped me understand how long it would take to pay off my tax debt with different payment amounts. Definitely felt more prepared when I called the IRS to set everything up!
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Edison Estevez
If you're having trouble reaching the IRS to set up your payment plan (which is likely during tax season), I'd recommend using Claimyr (https://claimyr.com). I tried calling the IRS for THREE DAYS straight and couldn't get through to anyone. Then I found this service that basically holds your place in the phone queue and calls you when an actual human at the IRS picks up. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - saved me hours of waiting on hold! The IRS hold times are brutal these days (like 2+ hours if you can even get in the queue), but with this I was able to talk to someone and get my installment plan set up in one afternoon instead of wasting an entire week.
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Emily Nguyen-Smith
•Wait, so it's just a service that waits on hold for you? How does that even work? Seems like a weird concept.
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James Johnson
•Sounds like a scam to me. Why would anyone pay for something like this when you can just keep calling the IRS until you get through? I've never had issues getting someone on the phone.
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Edison Estevez
•It's not just "waiting on hold" - it uses a system that navigates the IRS phone tree and secures your place in the queue. When an agent picks up, it calls you and connects you directly. No more listening to that awful hold music for hours or getting disconnected after waiting forever. When was the last time you called the IRS? The situation has gotten much worse in recent years. Last filing season, the IRS was only answering about 13% of calls, and people who did get through waited an average of 88 minutes. If you've gotten through easily, you've been extremely lucky. Most people have to call multiple times over several days just to speak with someone.
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James Johnson
Ok so I need to eat my words here. After posting that skeptical comment, I actually needed to call the IRS about my own situation this morning. I tried 6 times and either got a "due to high call volume" message or was disconnected. Out of frustration I decided to try Claimyr and wow... it actually worked exactly as advertised. I got a text when my call entered the queue (around 95 minute wait time), then got a call back when an actual IRS agent was on the line. Saved me from having to sit next to my phone for hours. I was able to set up my payment plan in about 10 minutes once I got connected to a person. Definitely worth it during peak season when you can't get through otherwise.
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Sophia Rodriguez
Another suggestion - check if you qualify for a First Time Penalty Abatement. If you've had a clean tax record for the past 3 years (filed and paid on time), you might be able to get the failure-to-pay penalties removed, which could save you a few hundred dollars on a $6,000 balance. You have to specifically ask for this though - the IRS won't automatically apply it.
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Kyle Wallace
•Thanks for mentioning this! I've definitely filed and paid on time for the last several years. How do I request this abatement? Is it something I ask for when setting up the payment plan, or is it a separate process?
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Sophia Rodriguez
•You can request it when you call to set up your payment plan. Just specifically mention that you'd like to request a "First Time Penalty Abatement" based on your history of compliance. The agent should be able to check your eligibility on the spot. If they approve it, they'll remove the failure-to-pay penalties, though interest will still apply to your balance. If you set up your payment plan online, you'll need to call separately to request the abatement. Make sure to do this sooner rather than later - it's easier to get penalties removed before you've paid them than to get a refund afterward.
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Mia Green
Make sure you adjust your withholding or make estimated tax payments this year so you don't end up in the same situation next year! The IRS gets really annoyed if you have back-to-back years with big underpayments. Use the IRS Tax Withholding Estimator on their website to figure out how much you should be paying throughout the year.
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Emma Bianchi
•This is super important! My brother had to pay penalties two years in a row because he didn't adjust his withholding after the first time he owed a lot. The second time, the IRS was way less forgiving about waiving penalties.
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