IRS Payment Plans and Agreements

The IRS offers a variety of payment plans to help taxpayers pay off their back taxes. These programs differ; you may receive a free installment plan or a pricier one. See below for more information on the various types of IRS payment plans and how you can benefit from them.

What is the IRS Payment Plans?

An IRS payment plan is an agreement between the IRS and the taxpayer to pay the taxes outstanding within a specific time frame. The IRS offers these plans to taxpayers who have owed taxes for up to ten years and provides them with a period and payment plan that is appropriate for their eligibility. IRS payment plans are classified into two types: short-term payment plans and long-term payment plans.

These payments are often made monthly for a fixed amount. If the arrangement is for more than 120 days, there is also a setup cost. The IRS offers several options for applying for these payment arrangements. Here is how to apply:

IRS Payment Plans
  1. Online Payment Agreement Application: The Online Payment Agreement application is the first and most convenient way to apply for an IRS Installment Agreement Plan. If the total combined amount of all your individual income tax, penalty, and interest owed is $50,000 or less, there is no setup cost for the online application. On the application, there are short-term payment options for 120 days or fewer, as well as monthly payment plans. This application is also available for businesses that owe less than $25,000 in total payroll taxes, penalties, and interest for current or previous tax years. When you apply for the Online Payment Agreement Plan, you will receive an immediate response from the IRS. It will immediately inform you whether your application was approved or denied by the IRS.
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  2. Application by Phone: You can also apply for payment plans over the phone. To apply over the phone, dial 1-800-829-1040. If you apply by phone, the IRS may request proof of your financial situation. Make sure you have all your documentation and financial information ready before calling.
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  3. Application by Mail: You can also apply for a payment plan by mailing the IRS the necessary documents. For the application, you must submit Form 9465 to the IRS. In addition, if you want to deduct your payment through payroll, Form 2159 is required. If you owe more than $50,000 in total, you must file Form 433F. All these forms must be mailed to the IRS address listed on your bill. The IRS allows applicants who apply by mail to reduce the accrual of fines and interest by making voluntary payments until their application is granted.
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  4. Application In-person:  The final option for applying for the Installment Agreement Plan is to visit an IRS office in person. You must bring all your documentation and have access to your financial information for the in-person application.

When it comes to the various plans that you might apply for, the short-term payment plan is a 180-day or shorter arrangement. This plan is free if you apply online, via phone, by mail, or in person. The highest amount you can owe the IRS under this plan is $100,000, which includes tax, penalties, and interest. Moving on to the long-term plan, the agreement can be for 120 days or longer. This package has various setup fees based on the payment type you pick. If you pay by automatic withdrawal, it costs $31 to apply online and $107 to apply by phone, mail, or in person. These costs change if you pay through a different method: applying online costs $149 while applying by phone, mail, or in-person costs $225. Keep in mind that if the applicant is considered low-income, these charges will be reduced.

How to Seek Professional Help?

IRS Payment Plans

Back taxes can be the most stressful and daunting scenario to deal with. It would take hours of research and a lot of effort to fill out all those paperwork in order for you to come up with a payment plan and choose the best possibilities. The best choice is to hire an experienced Miami Tax Accountant to complete all these forms and advise you on the best payment plan.

SDG Accountants is a tax and accounting firm located in downtown Miami, and we are the top tax accountant in Miami for all your tax and accounting needs. We help small businesses and individuals expand their businesses.

Contact us by phone at +1 (786) 706-5905 or by email at admin@sdgaccountant.com.

You can also schedule a free initial consultation with us by clicking on the following button:

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What Happens If I Do Not File or Pay my Payroll Taxes?

Payroll Taxes

When it comes to unpaid taxes, the IRS is a little harsher on corporations than on individuals. Businesses owe more taxes and are more involved in tax administration than individuals. People who owe taxes are treated harshly by the IRS, who consider it a significant infraction and a serious felony. They are unconcerned with an individual’s or a business’s financial situation, whether they have declared bankruptcy or are deeply in debt; all they worry about is that you pay the taxes you owe. Payroll taxes are the most strictly enforced by the IRS of any sort of tax. They are highly concerned about unpaid payroll taxes and have hefty penalties for late payment.

A company that receives payroll taxes from its employees is obligated to pay those taxes on their behalf. If a company fails to pay its taxes, it is considered fraudulent and is dealt with accordingly.

What are Payroll Taxes?

Payroll Taxes

All businesses must submit all accurate information to the IRS, make monthly payments to the federal payroll tax department, and file informational returns. The company is obligated to provide a W-2 Form to all workers and a Form 1099 to any individual contractors so that they may identify how much they were paid and what deductions and bonuses they received. All businesses must also use the IRS-created Electronic Funds Transfer (EFT) system to deposit Medicare and Social Security taxes for their employers and employees. This deposit can be made monthly or semi-weekly and is based on forms from past years, such as Form 941. If your employer has more than $50,000 in tax withholding each year, they must deposit semi-weekly, and those with less than $50,000 in tax withholding must deposit monthly. The IRS will determine the frequency of your deposits, and you will be notified.

Businesses must also pay Federal Unemployment Tax Act (FUTA) tax each quarter if their total salaries paid for the quarter exceeded $1,500. In terms of all the forms and their functions, Form 940 is used to report your FUTA tax. Other forms include Form 941 or Form 944.  On a quarterly basis, Form 941 is used to report employee wages, employer withholdings, and Medicare and Social Security taxes. Form 944 is the same as Form 940, however, it is reserved for employers with annual tax withholding of less than $1,000 per year.

What happens when a business fails to pay or file its Payroll Taxes?

When a company fails to pay its taxes, particularly its payroll taxes, it is not a minor issue. Many firms get into financial difficulties and are forced to postpone paying their taxes. This results in a failure to submit a penalty of 5% every month, with a maximum penalty of 25%. Other steps that the IRS could take include levying or enforcing a levy or lien on the bank accounts of businesses or individuals.

How to Solve this Problem?

This is a significant situation that might be difficult to handle. The first step you could take is, of course, to pay your taxes if you can find the money, but if you can’t, here’s what you need to do. If it is completely difficult for you to pay your taxes, you can request extensions. The IRS is often able to be patient and provide you with a time period and a plan for paying these taxes. If you are unable to do so, do not wait for the IRS to come knocking on your door; instead, get assistance. Seek expert assistance from a Miami Tax Accountant who has dealt with similar issues and assisted individuals and organizations in dealing with them efficiently.

Any form of tax problem necessitates the assistance of a professional. Allow the pros to handle the process of owing payroll services, which can be difficult and intimidating. We can assist you in sorting through your options and determining the best solution and payment plan for you. Our team consists of Tax Preparers in Miami who have been dealing with issues like these for years and have solved them effectively. Be a part of our happy clients and let us take care of all your tax concerns.

All you have to do is reach out to us; you can email us at admin@sdgaccountant.com or call us: +1 (786) 706-5905.

The IRS Streamlined Filing Compliance Procedures

Streamlined Filing Compliance Procedures

Expats can be found all over the world, whether in the United States, Italy, Canada, or Mexico. They are the ones who prefer to enjoy life and go out into the world to challenge the world with their talents and appreciate the beauty that it has to offer. However, other expats are solely in the country for work reasons, which is extremely inspiring given that you have to leave your entire life behind for a simple job that could transform your life drastically. Many expats who leave the United States are unaware that the United States is one of two countries that force expatriates to pay taxes regardless of where they live as U.S. citizens. The streamlined filing compliance procedures (“streamlined procedures”) describe below in detail.

Streamlined Filing Compliance Procedures

When you move to a new country, it’s easy to lose sight of your previous responsibilities. Many expats have not submitted their tax returns in the 10 or five years since they left. It is critical to file your tax returns when travelling outside of the United States in accordance with U.S. tax rules. In 2012, the IRS introduced a new approach known as the streamlined filing compliance procedures to assist foreigners in catching up on their taxes without incurring any penalties. The streamlined procedure is ideal for expats who want to file all of their prior tax returns without stress.

What are the Streamlined Filing Compliance Procedures?

As previously stated, streamlined filing compliance procedures were designed in 2012 to assist expats in catching up on their taxes for past years. It is a method for expats to avoid penalties and fines when submitting previously unpaid taxes. Before you worry about anything else, the first and most crucial step is to catch up on your U.S. expat taxes as well as your foreign bank account reports (FBAR). The IRS streamlined filing compliance procedures and delinquent FBARS procedures can be used to do this. All of this information can be overwhelming to hear and comprehend; leave the stress to us, and our experienced Tax Preparer team will submit all of your U.S. expat taxes.

How Do I Know if I Qualify for A Streamlined Filing Procedure?

To qualify for the streamlined procedures, you must present documentation that you have been living in a separate country and were not advised that you were required to file your taxes in both the United States and the nation in which you are living. This can be accomplished by mailing a signed form known as Form 14653, which validates your status as unknown and contains other forms that will all be mailed as a package.

What Steps Should I Take to Complete the Streamlined Filing Compliance Procedures?

IRS Form 14653

This is what you need to do next if you qualify for a streamlined procedure:

  1. The first step is to file your income tax return for the most recent three tax years. This necessitates the preparation of your documents.
  2. The second stage is to file the most recent six years of FBAR forms. If you were reporting for a single year, you would generally only file FBAR if the total of your non-US bank accounts amounted to more than $10,000 at any point throughout the year. However, because you are filing for six years under the streamlined procedure, you must file FBAR regardless of whether you meet the $10,000 requirement. The FBAR forms are only intended to be submitted online.
  3. The third and most crucial step is to submit your signed Form 14653, which certifies that you are an expat living outside of the country, that you are a U.S. citizen, and that you were unaware that you were required to file taxes while living outside of the country.

How to Prepare for the Streamlined Procedure?

To prepare for the streamlined procedure, we recommend that you hire an experienced Expat Tax Accountant in the United States to help you file all of your FBARs and other program-required forms. All they would need are your tax returns for the previous years and your foreign financial accounts for the last six years.

What if I Do Not Qualify for the Streamlined Procedures?

If you were notified that you are obligated to file your taxes as a U.S. citizen while living outside of the United States, you do not qualify for the streamlined procedures.

To remedy this, the IRS provides another service that can assist you in catching up. The IRS Criminal Investigation Voluntary Disclosure Program, for example, or the Delinquent FBAR Submission Procedures. Contacting a U.S. Expat Tax Accountant who can assist you identify the right program for your case is your best option.

Contact SDG Accountants, which offers U.S. Expat Tax Services and has numerous professional tax accountants all around the world. Make an appointment for a consultation today using the link below!

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