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Need advice setting up payments for income tax

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bbustums

Junior Member
What is the name of your state (only U.S. law)? Texas

I have about $3000 I owe in income tax from 2013 taxes, no other back taxes. I am trying to figure the best way to get those taxes reduced and set up a payment plan of some sort. How should I go about handling this and can I do it myself without hiring a pro?

Did a small amount of research and found out about offer in compromise but I don't know if that is always the best route to take. I also saw that rules changes now have a 12 month rule(12 months x disposable income) payoff option as opposed to 48 months... can I go about setting this up myself and how do I calculate and prove what is my disposable income... can I still set up a payment plan for that 12xDI amount or do you only get a certain amount of time to pay it in full?

With all my other bills, expenses, obligations, I can really only afford to pay about $50 a month to the IRS so I would love to prove my disposable at that amount. Am I correct that if I can prove $50 a month DI that I would have to pay 12x$50 and get my taxes reduce to $600?

Any answers and advice on how to start and what to avoid doing is appreciated.
 


LdiJ

Senior Member
What is the name of your state (only U.S. law)? Texas

I have about $3000 I owe in income tax from 2013 taxes, no other back taxes. I am trying to figure the best way to get those taxes reduced and set up a payment plan of some sort. How should I go about handling this and can I do it myself without hiring a pro?

Did a small amount of research and found out about offer in compromise but I don't know if that is always the best route to take. I also saw that rules changes now have a 12 month rule(12 months x disposable income) payoff option as opposed to 48 months... can I go about setting this up myself and how do I calculate and prove what is my disposable income... can I still set up a payment plan for that 12xDI amount or do you only get a certain amount of time to pay it in full?

With all my other bills, expenses, obligations, I can really only afford to pay about $50 a month to the IRS so I would love to prove my disposable at that amount. Am I correct that if I can prove $50 a month DI that I would have to pay 12x$50 and get my taxes reduce to $600?

Any answers and advice on how to start and what to avoid doing is appreciated.
The IRS will only entertain the idea of an offer in compromise if they believe that they cannot collect the amount that you owe, within the 10 year statute of limitations. I can guarantee that you are not going to get any kind of reduction for a balance due that is only 3000.00. The IRS is also very good about monthly payment amounts. They will pretty much agree to whatever amount you are willing to pay monthly, as long as it is reasonable...and as long as its as least as much as the total debt divided by 72 months. Therefore, its quite likely that they would accept $50.00 a month from you.

Its also quite easy to do. You don't need any help. All you have to do is call 1-800-829-1040 (your wait time will be much less if you call before 9:00 AM) and tell them that you owe taxes for 2013 and that you want to set up an installment plan.
 

bbustums

Junior Member
The IRS will only entertain the idea of an offer in compromise if they believe that they cannot collect the amount that you owe, within the 10 year statute of limitations. I can guarantee that you are not going to get any kind of reduction for a balance due that is only 3000.00. The IRS is also very good about monthly payment amounts. They will pretty much agree to whatever amount you are willing to pay monthly, as long as it is reasonable...and as long as its as least as much as the total debt divided by 72 months. Therefore, its quite likely that they would accept $50.00 a month from you.

Its also quite easy to do. You don't need any help. All you have to do is call 1-800-829-1040 (your wait time will be much less if you call before 9:00 AM) and tell them that you owe taxes for 2013 and that you want to set up an installment plan.


Thanks for your advice. So from what you know, the mass majority of people get turned down for OIC? Do you have to truly demonstrate extreme circumstances to get it and have a very sizable amount owed?

Can you tell me if OIC affects your credit score? We are going to trying and get a USDA home loan soon and don't want anything affecting it. Also, how soon before income taxes owed affects your credit? i did get a letter stating I have a $30 "failure to pay penalty" tacked on. I am fine with going ahead and setting up payments for the $3000 though... is 72 months a typical time frame people opt for? Any extra advice on dealing with the agent on the phone and what I should have ready? Can I do it online instead with 9465 form or is it more advantageous to speak directly to an agent?
 
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Zigner

Senior Member, Non-Attorney
Can you tell me if OIC affects your credit score? We are going to trying and get a USDA home loan soon and don't want anything affecting it.
How do you expect to be able to afford a home if you can only afford $50 to pay your tax bill?
 

bbustums

Junior Member
How do you expect to be able to afford a home if you can only afford $50 to pay your tax bill?

Put it this way, we always make it happen when we have to and I am figuring in what we expect to pay in mortgage when thinking about how much I believe I can handle in tax payments. I just know there won't be much leftover after expenses so I said $50 because I know that's doable and if the IRS will accept that, then that's where I want it to be.
 

davew128

Senior Member
Put it this way, we always make it happen when we have to and I am figuring in what we expect to pay in mortgage when thinking about how much I believe I can handle in tax payments. I just know there won't be much leftover after expenses so I said $50 because I know that's doable and if the IRS will accept that, then that's where I want it to be.
What happened when you went to the IRS website for information about payment plans? The IRS is very clear about what they will accept and what they won't, and in your case they will NOT accept $50/month.
 

bbustums

Junior Member
What happened when you went to the IRS website for information about payment plans? The IRS is very clear about what they will accept and what they won't, and in your case they will NOT accept $50/month.

I haven't gone to the site yet but what makes you say with such certainty that they will not accept $50 a month? I have heard they will accept a reasonable amount. Here is the thing... will they make me take a 3 year pay off or can I do more years? I have heard either 3 years or 5 years. How can I qualify for 5 years if that's possible?
 

Zigner

Senior Member, Non-Attorney
Why should they be content to give you an extended payment plan while you then turn around and spend MORE money?

Why would the lender be content in lending you money when their collateral has a chance of having a lien placed on it by the Feds?
 

davew128

Senior Member
I haven't gone to the site yet but what makes you say with such certainty that they will not accept $50 a month? I have heard they will accept a reasonable amount. Here is the thing... will they make me take a 3 year pay off or can I do more years? I have heard either 3 years or 5 years. How can I qualify for 5 years if that's possible?
Clearly you still didn't go to www.irs.gov :rolleyes::rolleyes:
 

tranquility

Senior Member
I haven't gone to the site yet but what makes you say with such certainty that they will not accept $50 a month? I have heard they will accept a reasonable amount. Here is the thing... will they make me take a 3 year pay off or can I do more years? I have heard either 3 years or 5 years. How can I qualify for 5 years if that's possible?
To start, forget about OIC. If you have the income to support a home loan, the IRS will determine you have the income to pay your taxes. Their opinion of what you can pay is going to be way more than yours. As to an installment request, for the amount you are talking about you would be guaranteed a request to pay it off over three years if you could not pay the amount in total. But, I have never seen them turn down an installment request for that amount where you pay the total in three years even if you don't prove up a hardship.

That means pay off the debt in total in three years. Because interest still accumulates, figure the amount to completely pay it off about 3 months shy of three years to allow the extra months to pay the accumulated interest. (You can cut it closer, but if it does not match their calculations you may have to submit another request.)

For your amount of $3,000, I would say that 2 years and 9 months is 33 months. Make an installment request of 3000/33 is about $91. Make a request for an installment amount of that amount and I bet it will be accepted.
 

LdiJ

Senior Member
What happened when you went to the IRS website for information about payment plans? The IRS is very clear about what they will accept and what they won't, and in your case they will NOT accept $50/month.
Dave I am confused? Where do you get that they will not accept $50.00 a month? You might want to go read line 10 of form 9465.
 

Zigner

Senior Member, Non-Attorney
Dave I am confused? Where do you get that they will not accept $50.00 a month? You might want to go read line 10 of form 9465.
If the OP pays it off in under three years then it's automatic. At least, that's the way I read the form. $50 per month will not accomplish that, so it opens the matter up for further review and possible declination.

ETA: The problem that I still see is that the OP is CHOOSING to buy a house, so the OP, presumably, has funds set aside for that. The OP likely has the funds available to pay this in full right now.
 

LdiJ

Senior Member
If the OP pays it off in under three years then it's automatic. At least, that's the way I read the form. $50 per month will not accomplish that, so it opens the matter up for further review and possible declination.
Go read line 10 of the form...seriously.
 

Zigner

Senior Member, Non-Attorney
This is from the instructions for the form and is what I based my answer on:

Guaranteed installment agreement.

You are eligible for a guaranteed installment agreement if the tax you owe is not more than $10,000 and:
During the past 5 tax years, you (and your spouse if filing a joint return) have timely filed all income tax returns and paid any income tax due, and have not entered into an installment agreement for payment of income tax;
You agree to pay the full amount you owe within 3 years and to comply with the tax laws while the agreement is in effect; and,
You are financially unable to pay the liability in full when due.

Note: It is the practice of the Internal Revenue Service
(IRS) to grant these installment agreements even if you
can pay your liability in full if the tax you owe is not more
than $10,000 and you meet the other criteria.
 

LdiJ

Senior Member
This is from the instructions for the form and is what I based my answer on:

Guaranteed installment agreement.

You are eligible for a guaranteed installment agreement if the tax you owe is not more than $10,000 and:
During the past 5 tax years, you (and your spouse if filing a joint return) have timely filed all income tax returns and paid any income tax due, and have not entered into an installment agreement for payment of income tax;
You agree to pay the full amount you owe within 3 years and to comply with the tax laws while the agreement is in effect; and,
You are financially unable to pay the liability in full when due.

Note: It is the practice of the Internal Revenue Service
(IRS) to grant these installment agreements even if you
can pay your liability in full if the tax you owe is not more
than $10,000 and you meet the other criteria.
Here is what line 10 says:

10
Enter the amount you can pay each month. Make your payments as large as possible to limit interest and penalty charges. The charges will continue until you pay in full. If no payment amount is listed on line 10, a payment will be determined for you by dividing the balance due by 72 months
While I appreciate the fact that the information shows in the instructions for form 9465, this is something that I deal with on virtually a daily basis, year round. At this point in time, the IRS gives installments agreements to virtually everyone who owes 50k or less, and unless you tell them you can pay a higher amount than the debt divided by 72 months, they pretty much just decide the amount by dividing the debt by 72 months.
 
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