Numerous Connecticut residents find themselves in the position of owing far more in taxes than they can actually afford. When this happens, they may feel overwhelmed and just opt to wait to pay their income tax when they have all the money on hand to do so. This is not something that will sit well with the IRS and can cause some serious legal problems for those who take this route.
At the end of the day, it is better to pay income taxes over time in payment plans than put off paying indefinitely. Believe it or not, the government understands that sometimes money is tight and some people will simply not have the ability to make significant tax payments in one lump sum. This is why they do offer payment plans.
Paying taxes on time can help one avoid added interest, fees and penalties. If one must utilize a payment plan, monthly interest may be added to the amount owed, so paying the full sum as soon as possible is advised. There are two types of payment plans offered: long term and short term. Those who need a short-term plan may not have to pay a user fee. For those with significant balances who need more time to pay off their tax debt, a user fee will be required.
How do payment plans work? If approved, payments will automatically be deducted from one’s checking account. Those with short-term plans also have the option to pay with a debit or credit card, but extra fees do apply. Those with long-term plans — those needing 120 or more days to pay off their tax debt — will need to pay an application fee and an account set-up fee. If the payment plan is not working out well, one can file to modify the payment structure — but there is a fee for that as well.
Some years, paying income tax in full is just difficult. There are ways to still get it done and avoid unnecessary legal action. Payment plans are just one option. Connecticut residents with tax issues can turn to an experienced tax attorney who will be able to review their tax situation and help them determine the best way to tackle it.
Source: irs.gov, “Payment Plans Installment Agreements“, Accessed on March 23, 2018