It's possible to obtain an IRS Extension of time to file or time to pay, but be aware that it can be a challenge. You must evaluate all available IRS payment options, and then choose the plan that is right for you when you decide to ask for an extension from the IRS. Sometimes, an IRS extension is not the best option. You may look at additional IRS payment option types, such as an IRS settlement, which differs from an extension, but could settle your IRS troubles even so. Read on for pointers on how to find out which IRS Payment Option (including an IRS Settlement) is right in your circumstances.
What Is an IRS Extension?
A true extension of time to "pay" the Internal Revenue Service doesn't exist. You're allowed to get extensions of time to file your taxes, but you aren't able to really get an time extension for paying the Internal Revenue Service before the due date passes. Make certain that you pay the tax debt you owe the Internal Revenue Service before the April 15th deadline if you don't want to owe the IRS more cash in penalties and interest charges. The Internal Revenue Service doesn't grant extensions of time for you to pay what you owe. So truly, it's ideal that you have your tax situation handled prior to the deadline.
IRS Extensions: "Currently Non Collectible" Status|"Currently Non Collectible (CNC)"
If you're in hot water with the Internal Revenue Service already, one IRS payment option is similar to an IRS extension in the sense that it gives you an extended period of time to get your finances back in order without the burden of putting up with IRS collections. Known as "Currently Non Collectible (CNC)" Status, if you qualify, it could get you some much needed time.
You will have to prove that you're not able to pay the IRS. Make the Internal Revenue Service see that this status is the sole resolution for you by proving that you would not be able to pay even part of your IRS debt without sacrificing a day-to-day necessity. Included under day-to-day essentials are water, heat, and transportation to and from your workplace. This is why only a genuine hardship will meet the requirements for this status.
IRS Payment Options
We already discussed that IRS extensions are not always your best way to go. Thus, it is recommended that you take a look at which tax debt resolution option with the Internal Revenue Service fits you best. Many IRS payment option types are available; we're going to outline a couple of the most common ones in this article.
IRS Payment Option: Installment Agreement
Under an Installment Agreement, your debt to the IRS is repaid month by month. Keep in mind that there are a few notable differences between this payment option and how you may have paid your other creditors. For one, the Internal Revenue Service is the one who decides the amount you will pay them, according to your finances. They are going to analyze how much you make and how much your day-to-day basics cost. They will demand the difference as payment to put towards the amount you owe. This is a great option if you're able to afford it.
Only individuals who are not capable of paying their IRS tax debt in full before the time the Internal Revenue Service has left to collect on the Tax Debt runs out will have the pleasure of obtaining a tax debt settlement. With a tax debt settlement, you can settle your back tax debt for a lesser amount than you really owed. How much the IRS is going to allow you to settle for will depend on your specific situation. The IRS won't agree to an IRS Settlement if you are able to afford to make payments toward your debt until the debt expires.