"Did You Know?" #8

DID YOU KNOW You can pay the IRS with an Installment Agreement?

If you can’t pay your balance due in full, the IRS will allow you to pay your balance due over a period of up to 72 months (6 years). Your account will continue to accrue interest and penalties until it is paid in full, but the IRS will not pursue additional collection on your account as long as you continue to make the agreed-to payments on time. There is a fee to set this up. The cheapest way to set up the agreement is online at www.IRS.gov and to have your monthly payments directly debited from your account. The most expensive set-up fee is to set it up by phone and pay by check or online without a direct debit.

Considering the IRS is currently charging 7% interest compounded daily and will assess penalties for failure to pay that can accrue up to 25% of your total owed if you can pay in full, that is going to be your cheapest option. If it’s an option, it may also make more financial sense to take out a personal loan at a lower interest rate than to do an installment agreement.

For more on IRS interest and penalties, see the IRS video below.
https://www.irsvideos.gov/Business/FilingPayingTaxes/AvoidingInterestAndPenaltyCharges