{"id":33551,"date":"2018-01-25T11:01:16","date_gmt":"2018-01-25T17:01:16","guid":{"rendered":"https:\/\/resource-center.hrblock.com\/?p=33551"},"modified":"2020-06-09T15:11:22","modified_gmt":"2020-06-09T20:11:22","slug":"whats-best-way-pay-tax-bill","status":"publish","type":"post","link":"https:\/\/hrbcomlnp.hrblock.com\/tax-center\/irs\/audits-and-tax-notices\/whats-best-way-pay-tax-bill\/","title":{"rendered":"What’s the Best Way to Pay Your Tax Bill"},"content":{"rendered":"

In 2016, about 29 million people filed their returns and owed taxes. Many people just pay the balance when they file \u2013 online or by check.<\/p>\n

But what if you can\u2019t pay in one lump sum?<\/p>\n

You\u2019re not out of luck. Here are three options.<\/p>\n

1. Borrow the money.<\/h2>\n

This is a great option if you have someone willing to loan you the money, especially with no interest.<\/p>\n

2. Pay with a credit card.<\/h2>\n

You may think about using a credit card now and paying off the balance over time. After all, you\u2019ll get the points. But with some credit card interest rates topping 20%, it\u2019s worth doing some extra math.<\/p>\n

3. Work with the IRS.<\/h2>\n

Not everyone knows that the IRS will work with taxpayers who owe. Here\u2019s more about the options you may have.<\/p>\n

Ask for a little more time<\/h3>\n

If you just need more time to get the money together, you can ask the IRS for an extension<\/a> of up to 120 days to pay your entire tax bill. Penalties<\/a> and interest<\/a> will accrue<\/a> until you pay the full tax bill.<\/p>\n

Set up a payment plan<\/h3>\n

If paying your entire bill upfront isn\u2019t an option, the IRS offers several types of alternatives \u2013 like monthly payment plans (called installment agreements<\/a>).<\/p>\n

And the penalties and interest the IRS charges on your tax balance may not be as high as you think.<\/p>\n

Here\u2019s why.<\/p>\n

As of January 2018, the IRS charges a 4% interest rate on unpaid back taxes. The penalty for not paying (called the failure to pay penalty<\/a>) is \u00bd percent per month, maxing out at 25% of the amount you owe for each tax year with a balance. In short, the annual cost would be 10% of what you owe (4% interest rate, plus 6% total penalty for the year).<\/p>\n

But if you get into a payment plan with the IRS, you can lower your costs. The IRS will cut your failure to pay penalty in half \u2013 to 0.25% per month. This lowers your annual cost to about 7%.<\/p>\n

The IRS offers several types of installment agreements, and even has options for people in hardship situations. Learn how to set up an agreement with the IRS to pay your taxes.<\/p>\n

What not to do: Ignore it<\/h2>\n

Do the math if you owe taxes and can\u2019t pay right away. You\u2019ll need to decide what\u2019s best for your situation.<\/p>\n

But remember: The one thing not to do is ignore it and hope the issue goes away. If you don\u2019t make arrangements with the IRS on your tax bill, the failure to pay penalty rate can double \u2014 to 1% per month when the IRS starts collection proceedings against you (with actions like liens<\/a> and levies<\/a>).<\/p>\n

The moral of the story: File on time and work out an arrangement with the IRS for your outstanding tax balance<\/a>. The sooner you do it, the less you\u2019ll pay in the end.<\/p>\n

An experienced tax professional can help you with your tax bill. Learn more about H&R Block\u2019s Tax Audit & Notice Services<\/a>. Or make an appointment for a free consultation with a local tax professional by calling 855-536-6504<\/strong> or finding a local tax pro<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

In 2016, about 29 million people filed their returns and owed taxes. Many people just pay the balance when they file \u2013 online or by check. But what if you can\u2019t pay in one lump sum? You\u2019re not out of luck. Here are three options. 1. Borrow the money. This is a great option if […]<\/p>\n","protected":false},"author":605,"featured_media":28829,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[25,51],"tags":[],"class_list":["post-33551","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-irs","category-audits-and-tax-notices"],"acf":[],"yoast_head":"What's the Best Way to Pay Your Tax Bill | H&R Block<\/title>\n<meta name=\"description\" content=\"You have options when you owe taxes. 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