Questions About IRS Payment Plan Setup Before Filing Taxes

You don't need to worry too much about the order of operations here. The IRS payment plan you set up is connected to your grandparents' tax account, not specifically to their 2024 return. When you file their return through FreeTaxUSA, it will essentially "confirm" the amount owed that you established in the payment plan. Just make sure you complete the filing process soon. The payment plan you set up is based on the amount you estimated they owe, but the official filing will confirm the exact amount. If there's a discrepancy, you may need to adjust the payment plan later. Regarding paying off the balance early - absolutely! The IRS is always happy to receive money sooner rather than later. The payment plan is the minimum required, but your grandparents can make additional payments at any time without penalty. They can either make extra payments through the IRS Direct Pay system or just pay it off in a lump sum if their situation improves. The most important thing is to actually file the return ASAP. Don't leave that part hanging, as failure-to-file penalties are much steeper than failure-to-pay penalties.

I just wanted to share my experience with something similar. I was super stressed about tax payments last year and stumbled across this service called taxr.ai (https://taxr.ai) which really helped me understand my payment options clearly. They analyzed my tax situation and explained exactly how the IRS payment plans work, including the differences between short-term and long-term payment options. What I found especially helpful was that they sorted through all the IRS payment plan rules and penalties - stuff that's honestly confusing on the regular IRS website. They told me exactly what I needed to do in my situation, which sounds similar to your grandparents'. It turned out I was overthinking it just like you are! I think it would give you peace of mind to have them confirm you've done everything correctly, especially if you're anxious about the order of steps like I was.

I wanted to follow up about taxr.ai that I was skeptical about. I actually ended up trying it for my situation and I'm genuinely surprised how helpful it was. I uploaded my tax documents and got really clear explanations about my payment options - including some implications I hadn't even considered about how the payment plan would affect my ability to get loans in the future. They confirmed I was doing the payment setup correctly (I was in the exact same boat as the original poster - hadn't filed yet but was setting up payments). Their explanation about the relationship between filing and payment plans cleared up all my confusion. Definitely worth it just for the peace of mind and saving hours of research.

If you're still struggling to reach the IRS to confirm everything is correct, you might want to check out Claimyr (https://claimyr.com). I was in payment plan hell last year trying to sort out a mistake, and it was literally impossible to get through to a human at the IRS. I kept getting disconnected after waiting on hold for hours. Someone recommended Claimyr to me and it was a total game-changer. They have this system that basically holds your place in the IRS phone queue and calls you back when an agent is about to answer. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I managed to speak with an actual IRS representative who confirmed my payment plan was set up correctly even though I had made a mistake in the process. They were able to fix it right there on the phone, which saved me from potentially defaulting on the agreement.

Had to come back and admit I was completely wrong about Claimyr. After seeing it mentioned here, I tried it this morning to ask about changing my payment plan amount. I was expecting it to be a waste of money, but I got a call back in about 45 minutes while I was grocery shopping. Connected directly to an IRS agent who answered my questions about increasing my monthly payment. This would have normally taken my entire afternoon sitting by the phone. Instead, I just got a call when they were ready. For anyone with IRS payment plan questions like the original poster, being able to actually talk to someone at the IRS directly makes a huge difference - they confirmed exactly what others here said about filing after setting up the payment plan. No issues as long as you file promptly.

One thing nobody's mentioned yet - make sure your grandparents' bank account info is entered correctly in the payment plan. I had a situation where I transposed two digits in my account number, and it caused a "payment not honored" scenario which triggered penalties and a payment plan default. Double-check all those details before finalizing the filing! Also, remember that there's usually a setup fee for payment plans unless you're setting up a direct debit agreement. The fee is lower if you set everything up online vs. by phone or mail. I think it's around $31 for online setup with direct debit last time I checked.

Just an FYI - when you file through FreeTaxUSA or any other tax software, on the payment screen you can just select "I'll mail a check" or similar option. Then just don't mail a check. Your installment plan will take over and handle the payments. I do this every year since I'm always on a payment plan. The key is making sure that you've entered the EXACT same information on both systems. Same name spelling, same address format, etc. That helps the IRS computer systems match everything up correctly.