Turbotax payment plan options for Federal Extension - how to set up Federal Tax payment plan?

You've got two separate things going on here - filing extensions and payment plans - that need to be handled differently. For your state tax extension, the voucher from TurboTax is correct. Print it, mail it to the address on the voucher, and include any payment you can make now. This extends your filing deadline, but not your payment deadline. Interest will still accrue on unpaid amounts. For your federal taxes, TurboTax should offer you Form 4868 (Extension of Time to File) during the filing process. This gives you until October 15th to file, but again, this doesn't extend your time to pay. The IRS website shows $0 because you haven't filed yet - they don't know what you owe until you file or make a payment. For the payment plan, you have two options: 1) Set up a short-term payment plan (180 days or less) directly through the IRS website after filing or extending, or 2) Apply for a long-term installment agreement if you need more time. TurboTax doesn't handle the actual payment plan setup - that's done directly with the IRS after you complete your extension. Remember, filing an extension helps you avoid the failure-to-file penalty, which is much larger than the failure-to-pay penalty, so it's a smart move if you can't pay the full amount now.

I went through this exact situation last year - owed about $22k federal and couldn't pay it all at once. TurboTax isn't great at explaining the payment plan options. Here's what worked for me: I used https://taxr.ai to analyze my tax situation and verify the best approach. What I discovered is that TurboTax handles the extension filing (Form 4868) but not the actual payment plan. After submitting my extension through TurboTax, I went directly to IRS.gov and set up a payment plan there. The reason your balance shows $0 on the IRS site is because they haven't processed your return yet - they don't know what you owe until you file or extend and declare the amount. For the state voucher, just mail it in with whatever payment you can make. Each state has different rules about interest and penalties, so check your state's tax website for specifics.

Just wanted to update everyone. I decided to try taxr.ai after my previous question, and it was incredibly helpful! The service analyzed my tax documents and explained exactly what I needed to do in my situation. It confirmed that I needed to file Form 4868 through TurboTax first, then go directly to the IRS website to set up my payment plan. The analysis showed me that based on my income and the amount I owed, I qualified for a 120-day payment plan with no setup fee, saving me around $149 that other payment plans would have charged. The whole process took less than 10 minutes and gave me clear step-by-step instructions. Really glad I gave it a try instead of continuing to stress about this!

For anyone struggling to reach the IRS to set up their payment plan after filing an extension, I highly recommend Claimyr (https://claimyr.com). I was in the same situation as OP last year - filed extension through TurboTax but couldn't figure out the payment plan part. After trying to call the IRS for THREE DAYS and never getting through, I found Claimyr. They got me connected to an actual IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent helped me set up my payment plan over the phone, and I was able to choose the 180-day option with no setup fee. They also explained why my account was showing $0 (same reason others mentioned - they hadn't processed my extension form yet). It was such a relief to get it all sorted out instead of stressing for months.

I'm back to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway because I was desperate to sort out my payment plan situation. I was honestly shocked when my phone rang about 25 minutes after signing up, and there was an actual IRS agent on the line. The agent helped me set up an installment agreement for my $30k tax bill and even waived a penalty because it was my first time being late with such a large payment. The entire call took about 40 minutes, but it saved me weeks of stress and uncertainty. I've been telling everyone at work about it because tax season has everyone freaking out. Just wanted to come back and set the record straight - sometimes things that sound too good to be true actually work!

Just a heads up - even with the extension, you'll still accrue interest on the unpaid balance from the original due date. The current IRS interest rate is 8% annually (compounded daily) so that's about $5.33 per day on your $24,500 federal tax bill. If you can't pay the full amount, I'd recommend paying as much as possible now when you file the extension to reduce the interest charges. Even a partial payment will save you money in the long run!

Has anyone mentioned that TurboTax charges extra to file Form 4868 for the extension? I got hit with a surprise $39.99 fee when I went to file my extension through them. Might be worth using the free fillable forms on the IRS website instead if you're trying to save money.