What if I owe more than I can pay?
If you want to estimate on how much you might owe, please use our tax estimator. Please use this tool so you will get an estimate on how much you might owe and you can plan accordingly. Click here for the tax estimator
Even if you do not have enough money to pay, a tax return should be efiled or filed to avoid further penalties for failure to file. Once your tax return is filed, the IRS can assist in finding a solution to the problem.
An additional reason to file a tax return this year is the tax rebate or stimulus package payment. Taxpayers must file or efile a 2007 tax return to get this payment; tax rebate eligibility and amount will be based on the filed tax return.
Again, regardless of any circumstance, you should file or efile your tax return by April 15, 2008. You can always file an amendment to your tax return later if you need to add or change something on your tax return.
Tax payment options on efile.com
Once you start and efile your tax return on efile.com you have 3 payment options:
Direct bank payment (enter your bank information and the IRS will transfer from your bank account)
Mail in a check
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Credit card tax payment options are available through Official Payments Corporation at 1-8002PAYTAX (1-800-272-9829) or http://www.officialpayments.com
Other Ways to Resolve Tax Debts
Taxpayers with a balance due on their return should consider:
- Cash advances on credit cards: Link2Gov Corporation at 1-888-PAY1040 (1888-729-1040) or http://www.pay1040.com
- Bank loans
- Liquidating savings accounts, savings bonds, stocks, etc.
- Borrowing against 401(k), Life Insurance, etc.
- Using equity in real estate or other assets
For your information, interest is charged on unpaid taxes from April 15, 2008 until the date of payment. In case you efile or file on time the late payment penalty is estimated ½% of the taxes owed for each month. Interest rates change so please call 1-800-829-1040 to get detailed information on the rates the IRS will charge.
Other options to pay taxes?
The IRS will help to set up an installment agreement when the situation warrants. Installment payments allow taxpayers to pay the tax debt over time. The IRS will consider whether an offer in compromise is an appropriate solution.
How to Set Up an Installment Agreement
Taxpayers wishing to pay off a tax debt through an installment agreement, and owe $25,000 or less in combined tax, penalties, and interest can use the Online Payment Agreement (OPA):
There are Three Options When Applying Online:
Pay in Full: You may agree to pay in full. With this option you will save penalties and interest.
Short Term Extension: If you cannot pay in full at this time, you may be eligible for a short term extension of time to pay of up to 120 days. There is no fee for an extension to pay.
If we grant online approval of your request for a short term extension, you will receive written confirmation within 10 days.
Monthly Payment Plan: If you cannot pay in full within 120 days, you may be eligible to make monthly installment payments. You must have filed all of your tax returns that are due.
Effective January 1, 2007 a $105 user fee will be added to the amount you owe and $52 for plans where the payments are deducted directly from your bank account. Or for eligible individuals with income at or below certain levels who apply and qualify, the reduced user fee of $43 will generally be added to the amount you owe including agreements where payments are deducted directly from your bank account.
If the IRS grants online approval of your request for monthly installments, you will receive written confirmation within 10 days.
More than $25,000 in combined tax, penalties, and interest may still qualify for an installment agreement, but a Collection Information Statement.
Click here for the Online Payment Agreement (OPA)
Compare Rates: After you have filed your taxes calculate the interest rates on the taxes you owe. Interest rates are low now and see if you can borrow the money at a lower rate than the IRS interest rate.