Finding out that you owe the IRS additional money can be disheartening, but it’s something that you have to handle.
Luckily, there are a number of ways you can settle your IRS tax debt. In most cases, the process is easy. Plus, you can use a variety of payment methods to get the job done.
If you owe the IRS additional taxes, here’s what you can do.
Settle Your IRS Tax Bill with Direct Pay
One of the fastest, most secure, and least expensive options is to use Direct Pay. First, you’ll need to sign up for an account to access the system. Then you can make a payment using your bank account.
The Direct Pay system walks you through the process, and there are only a few steps. Typically, you’ll need to select the tax year, verify your identity, and enter the payment amount.
You can elect to receive an email confirmation of the transaction (which is wise), so you’ll have a record as you settle your IRS tax debt.
Use a Credit or Debit Card
If you prefer to use a credit or debit card to settle your tax debt, you have a few options. There are multiple payment processors you can use, so you’ll need to choose the right one for you.
The process is typically quick, although it varies slightly from one processor to the next. It is important to note that there is a fee for paying with a card, unlike when you use Direct Pay.
Usually, debit cards have flat fees. Credit card fees are typically a percentage of the amount you’re paying to settle your IRS tax debt. This means that the credit card fees can be high, depending on how much you owe.
Some processors also accept payments through digital wallets, so that option is available as well.
Set Up a Payment Plan with the IRS
If you can’t settle your IRS tax debt now, then consider setting up a payment plan. Qualifying taxpayers can pay what they owe over a period of up to three years, allowing them to spread out the burden.
Not everyone qualifies for a payment plan. For a long-term repayment plan or installment agreement, you can’t owe more than $50,000. For a short-term plan, you must owe $100,000 or less.
There are set-up fees for some payment plans, although the fees are typically low. However, in some cases there’s interest on top of that. You can apply online and may have to set up direct debits depending on how much you owe.
Even though tax day is here, there is still time to settle your IRS tax debt if you use one of the methods above. Alternatives like mailing a paper check, might not make it to the IRS in time and could lead to penalties and interest.
Have you ever used one of the methods above? Share your experience in the comments section below.
Learn more about taxes by checking out more of our coverage of this year’s filing season:
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