The pandemic was a before-and-after moment for America’s relationship with the IRS and how the agency withholds taxes from employees’ incomes. According to Politico, three out of four taxpayers got a refund before COVID-19, but today, it’s just 65%.
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If fewer people are getting money back at tax time, then more are getting bills from the IRS — and many might not realize they owe anything until after they file their returns.
If you received an unpleasant surprise in the form of an IRS tax bill, consider the following options if your payroll withholdings were insufficient to satisfy Uncle Sam.
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Unsurprisingly, the IRS encourages taxpayers to settle their bills in full right away. It disincentivizes all other options with penalties and/or interest. If you’re able, the best option is to get it out of the way and settle your bill with any of the following options:
- Visit the IRS Payments Page to pay from your bank account, by card, via your digital wallet or through your IRS account.
- Call the toll-free number on your bill.
- Use the IRS’s EFTPS (Electronic Federal Tax Payment System).
- Pay through the IRS2Go app.
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Set Up a Short-Term Payment Plan
If they can’t pay in full, the IRS grants short-term payment plans that give taxpayers up to 180 days of reprieve. They don’t have to make payments as long as the entire bill is settled within six months. There’s no fee, but interest accrues on the balance, so the more you pay along the way, the less you’ll pay in finance charges. Set up a short-term payment plan using the Online Payment Agreement or by calling (800) 829-1040.
Request an Installment Agreement
If six months isn’t enough, you can request a long-term installment agreement by using the Online Payment Agreement application and completing Form 9465, Installment Agreement Request.
Qualifying is harder than for a short-term plan, and not all taxpayers are eligible. Also, there is a fee to set up an agreement that the agency reduces or even waives for qualifying low-income households.
Make an Offer in Compromise
In some cases, the IRS will accept an offer in compromise (OIC) for less than your stated tax liability. There are strict qualifying criteria and you must demonstrate an inability to pay. Before submitting an offer, use the agency’s Offer in Compromise Pre-Qualifier tool to see if you’re eligible — but understand that using the tool doesn’t guarantee eligibility.
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This article originally appeared on GOBankingRates.com: 4 Surprising Ways To Pay Your Taxes
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