Thomas M asked:
I think that I will have to pay self employment taxes for the first time. Will they allow me an extension and/ or the opportunity to create a monthly payment plan to pay off the taxes if I do not have the money immediately ?
Thank you
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4 users responded in this post
The IRS will allow you to make payment arrangements for any tax debt owed. However, if you are able to find another source of financing the debt. That will likely be a better solution. Read the link for more information.
Yes, they will allow you a payment plan. But, it isn’t free. If you want to send them a check every month the cost is $105 for the agreement…if you let them take it directly out of your account every month then the cost is $54. Both of those amounts are a one time fee.
And, then you will also have to pay penalties and interest on the amount due. I do know that a failure to pay on time is 1/2% per month or part of a month capped at 6%. I am not current on the current interest rate but I would guess around 7% compounded daily. I just looked it up it is actually 6% compounded daily. I was right but they dropped it a percentage point for the second quarter that starts April 1st.
And, with this agreement you have to stay current with all payments…that includes estimated payments for self employment.
The IRS isn’t the cheapest place to get credit. You might consider borrowing it from somewhere else at a cheaper rate if you can.
Hope this helps
You can request an “installment agreement” with the IRS however try to pay it off as quickly as possible. Penalties and interest accrue monthly on top of the fee they charge to set up the plan. They will ask you how much you can afford each month - make sure you can afford it. Once you enter into the agreement you can’t make any late payments or they will demand the payment in full.
The deadline to pay on time is 4/15/08. If you can’t pay it then, yes they’ll set up a payment plan, but it will cost you.
If you will also owe se taxes for 2008, you need to make quarterly estimated payments so you aren’t in this same situation next year.
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