01 Sep When Is It Better to Pay Taxes by the Installment Plan?
Paying taxes is never fun, but it can be less painful with an installment tax plan. The IRS offers tax payment plans for those who owe less than $100,000 in tax debt. This may seem like a good idea to some people – the installment tax plan will allow them to pay their tax bill off over time rather than all at once. But many other factors need to be considered before deciding whether this is the correct route for you. Read on to find out more!
Things to Consider Before Choosing the Installment Plan Option
Tax installment plans can help manage your tax liability. There are many reasons that someone would want to opt for a tax payment plan rather than managing their tax debt all at once, such as: having trouble with cash flow or being able to set money aside each month to pay off the taxes owed.
Just because tax installment plans are offered doesn’t mean that they’re the best option. People who opt to use a tax payment plan should consider if their business has any tax deductions or credits available and how much of an interest rate penalty would be incurred by not paying off the tax liability immediately.
One of the main reasons why someone might want to use a tax installment plan is because they’re not sure how much tax liability they’ll end up having at the time of filing. This could be due to any number of different things, such as turnover in personnel or an unforeseen event that would affect profits and payouts for taxes owed come tax season.
Before deciding to enroll in a tax installment program, determine if you will be able to pay the monthly installments on time. The IRS will set up a monthly schedule that can be paid off through payroll deductions or electronic funds transfer.
Some benefits of paying taxes by installments include the option of keeping up with tax payments so that tax debt doesn’t go unpaid, the money isn’t lost to interest and penalties, it’s more affordable than paying all tax liability at once.
Tax installment plans should be used during times of financial hardship, not as a way to get out of paying taxes owed or avoid the IRS altogether. There are many situations where this type of tax payment plan is beneficial, but it’s always best for taxpayers and their business partners to consider all pros and cons before committing to a relief plan.
The more tax debt someone has and the longer they’ve had it unpaid, the greater risk there is for penalties and interest charges. This is true whether or not tax installment plans are used to pay off the tax debt – meaning that it’s always in a taxpayer’s best interest to try and work out an agreement with the IRS as soon as possible, rather than waiting for tax!
Contact Golden Tax Relief today for more advice on paying taxes through the installment plan and whether it’s right for you! Call Golden Tax Relief at 844-229-8936 today.