Tips to remember when you have outstanding tax liability to the IRS:
• Receipt of tax bill. If you receive a bill for taxes due, pay the taxes owed including any penalties and interest. If you are not able to pay in full the total amount due, consider getting a loan to full pay the tax bill if rates are lower versus paying on installments with penalties and interest .
• Direct pay. Using IRS direct pay, you can now pay your tax bill directly from checking or savings account. You can schedule payments 30-days in advance and cancel scheduled payments 2-days before the scheduled payment date. For more information, visit https://www.irs.gov/payments/direct-pay. If using a mobile device, you can access the IRS2Go app to pay with either Direct Pay or debit or credit card. IRS2Go is the official mobile app of the IRS. Download IRS2Go from Google Play, the Apple App Store or the Amazon App Store.
• Pay with credit card. You can pay your bill with a credit card online, by phone or with a mobile device. There is a convenience fee charged by the credit card processor not by the IRS. For more information regarding convenience fee, visit https://www.irs.gov/uac/pay-taxes-by-credit-or-debit-card.
• Other ways you can pay. You can pay using: 1) Electronic federal tax payment system (EFTPS) https://www.eftps.gov/eftps/; 2) Electronic funds withdrawal as you e-file your income tax return; 3) same day wire applicable bank fees applies; 4) money order; 5) check; 7) cash at participating retail store. For more information regarding IRS official payment site, visit https://www.officialpayments.com/fed/index.jsp
• Need additional time to pay. If you need more time to pay you may be able to pay on installment if you qualify.
• Online Payment Agreement. You are eligible to apply for online payment agreement if: 1) Individual: have filed all required returns and the combined tax liabilities is not more than $50,000, or for a short term agreement if combined taxes owed is not more than $100,000 ; 2) Business: have filed all required returns and the combined tax liabilities is not more than $25,000. If you are approved for online payment agreement, there is set-up fees added to your bill unless you are approved for a short-term agreement of no more than 120-days no set-up fee.
• Form 9465. Use Form 9465 to request to add the liability for a new period to an existing installment agreement. Beginning January 1, 2017, the fees for setting up an installment agreement are: 1) $225; 2) $107: make payments by direct deposit; 3) $149: set-up an online payment agreement); or 4) $31: set-up an online payment agreement and make payments by direct deposit. To modify or reinstate an installment agreement, the fee is $89.For low income taxpayers the fee to set up an installment agreement is $43 or $31 if an online payment agreement is set-up and the payments are made by direct debit.
• To avoid over and under-payment of federal income taxes withheld from your pay, update FormW-4 withholding allowance certificate with your employer. You may also visit https://apps.irs.gov/app/withholdingcalculator/.
• If you owe alternative minimum tax, self-employment tax, and other taxes, use the instructions in Publication 505 tax withholding and estimated taxes.
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Disclaimer: Any accounting, business or tax advice contained in this communication is neither intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.
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Al-os & Associates Accountancy Corporation provides accounting and tax services to individuals, corporations, LLCs and business entities. The Firm has a niche in defending taxpayers audited by the IRS and other governmental agencies.