Friday, April 9, 2010

Ways to Pay Your Federal Income Tax

Q - I can't pay the entire amount I owe for income taxes by April 15. What are my options?

A - People who owe taxes but can’t pay the full amount owed by the April deadline should still file their return on time and pay as much as they can to avoid penalties and interest.

If you can’t pay the full amount, you can contact the IRS to ask about alternative payment options. Here are some of the alternative payment options you may want to consider.

Based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at or by calling 800-829-1040.

Taxpayers who request and are granted an additional 30 to 120 days to pay the tax in full generally will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time.

Or, you can apply for an IRS installment agreement using the Web-based Online Payment Agreement application on This Web-based application allows taxpayers who owe $25,000 or less in combined tax, penalties and interest to self-qualify, apply for, and receive immediate notification of approval. Generally, the IRS with accept a payment amount that will pay off your tax debt in five years. (Divide the amount you owe by 60 months to arrive at the suggested minimum monthly payment.)

You may make additional, unscheduled payments when you are on an installment payment agreement, and you can pay the full amount off early at any time.

This option provides you with a simple and convenient way to establish an installment agreement and eliminates the need for personal interaction with IRS and reduces paper processing.

You may also complete and submit a Form 9465, make your request in writing, or call 1-800-829-1040 to make your request. For balances over $25,000, you are required to complete a financial statement to determine the monthly payment amount for an installment plan.

I will be happy to help you with any of these options.

You can charge your taxes on your American Express, MasterCard, Visa or Discover credit cards. Additionally, you can pay by using your debit card. There is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee or flat fee. Do not add the convenience fee or flat fee to your tax payment.