IRS payment plans: seeking anecdata
April 11, 2025 2:32 PM Subscribe
What has been your personal experience with a payment plan from the IRS for a tax bill you simply cannot pay?
Because I am aworld-class idiot fallible human, I owe the IRS a scary (to me) amount of money this year. I'm curious about what the payment plans are like. I have seen two somewhat relevant past questions, but I'm mostly asking about the actual experience of setting up the plan, terms, length, etc., rather than what it's like to talk to the phone answerers. (I've seen the page at IRS.gov explaining the options, but they don't seem to get specific until you actually start the application process.)
Because I am a
I’ve done this a couple of times (I’ve been wildly under withheld on my W2 employment a couple times) and most recently did it online. I literally logged into the IRS website and filled out the form. Apparently there’s a monthly minimum that depends on your amount owed; I asked for less than the monthly minimum and then a couple weeks later got a letter saying I had to pay the monthly minimum. Not actually that hard.
posted by chesty_a_arthur at 2:49 PM on April 11 [4 favorites]
posted by chesty_a_arthur at 2:49 PM on April 11 [4 favorites]
Also if you get a weird and scary letter about penalties and interest, your best bet to to write a polite and apologetic letter about how you made a mistake and would they please abate (use that word) the penalties and interest. Source my dad who work at the irs for decades and would always abate for nice, apologetic “I messed up” letters.
posted by toodleydoodley at 3:11 PM on April 11 [16 favorites]
posted by toodleydoodley at 3:11 PM on April 11 [16 favorites]
Note that if you have to talk to an IRS representative and you can't get through, you can try contacting one of your members of congress (Senator or member of the House of Representatives) to ask them to help. There's usually a link on their website for "Help with a federal agency" or "Constituent services."
You may not need this, but if you hit a roadblock, your legislators' office may be able to clear that roadblock for you.
posted by kristi at 3:13 PM on April 11 [4 favorites]
You may not need this, but if you hit a roadblock, your legislators' office may be able to clear that roadblock for you.
posted by kristi at 3:13 PM on April 11 [4 favorites]
It was over 30 years ago, but the IRS was surprisingly helpful and we set up a very reasonable payment plan. Over the years I've had a much more difficult time dealing with the cable company and various gym memberships to be honest.
posted by PurpleNico at 3:54 PM on April 11
posted by PurpleNico at 3:54 PM on April 11
I've done it a few times, usually they are very helpful and the only bad part is waiting on hold for them to answer in the first place.
If you have trouble over the phone you may have a local IRS office you can call or even visit in person, the locals have come through for me a couple of times when I had a complicated tax situation.
posted by mmoncur at 4:25 PM on April 11 [1 favorite]
If you have trouble over the phone you may have a local IRS office you can call or even visit in person, the locals have come through for me a couple of times when I had a complicated tax situation.
posted by mmoncur at 4:25 PM on April 11 [1 favorite]
Best answer: For Reasons I have done this several times, including in 2023 & 2024. (and probably this year, although I haven't filed yet lol I know, I know.)
setting up the plan
I'll second chesty_a_arthur.
Do. It. On. Line. I don't know what a scary amount of money is to you, but my bet is that unless you owe literally high 5 figures you don't even need to talk to anyone on the phone, much less write letters to anyone dear lord it's the 21st century. (They may well send you physical letters about stuff, I think they have to for "official documentation" rules, but those letters can easily be 30 to 90 days behind what's actually happening - like I'd be 3 months into my payment plan before I got a physical letter confirming that I'd set up a payment plan . . .)
You want anecdata - doing it online the last couple of years was so easy and stress-free that I barely even remember it, I applied online, I picked the 6-month (180 days) payment plan, either the webpage refreshed and/or I got an email detailing that I was agreeing to a total payment with penalties and interest of $XX, with $Z per month due every month, I electronically signed the thing, done.
I'm pretty sure you can set up automatic withdrawals but my tax payment issues are cash flow rather than anything else, so I didn't bother, I just put a once-a-month reminder in my phone calendar which kept it in the forefront of my mind enough that I'd remember to keep enough in my account to cover it, and whenever I'd get some extra money via overtime I'd send in a extra payment or pay extra on the due date. Payment via direct debit from my checking account, I had to log into the IRS website & navigate to the right page to arrange for a payment.
they don't seem to get specific until you actually start the application process.)
Well, yeah, they won't, because it does depend on how much you make & how much you owe. When I owe it's generally low 4 figures or less, so while I don't recall having any sort of explicit necessary minimum payment I'm like 90% sure that the 6 month plan was the only one offered to me because I just didn't owe that much. So if I owed like $1000 just by basic math my minimum payment was like $175 ($166.67 on the underpayment plus a small amount for interest & penalties.)
So I can't personally speak to what happens if you're in a situation where you can or should set up a longer term payment plan. (I have done a longer term payment plan, but that was so long ago that I doubt that it's in any way relevant.)
And now I'm gonna grind the axe I always grind when I answer tax Asks - "penalties and interest" can sound scary as fuck BUT IT IS ALMOST ALWAYS THE BEST DEAL. Quarterly interest rates are currently 7%. (I wish I could get 7% interest on everything else in life.) The penalties you owe are a result of some mathematical formula based on how much you owe & the interest rate. You might be able to figure out your penalties using Form 2210 but it's not necessary.
End result is that it's very very very very very likely that paying the IRS penalties and interest will ultimately cost you less than paying by credit card or unsecured personal loan or early withdrawal from retirement accounts or whatever other schemes people come up with because they're freaked out about penalties and interest.
It's fine, you'e fine, they're not out to get you or punish you, it's seriously a bunch of accountants doing their totally normal boring daily jobs. Whatever your tax problems are it's probably the 27th case exactly like it they've handled in the past week.
posted by soundguy99 at 6:28 PM on April 11 [12 favorites]
setting up the plan
I'll second chesty_a_arthur.
Do. It. On. Line. I don't know what a scary amount of money is to you, but my bet is that unless you owe literally high 5 figures you don't even need to talk to anyone on the phone, much less write letters to anyone dear lord it's the 21st century. (They may well send you physical letters about stuff, I think they have to for "official documentation" rules, but those letters can easily be 30 to 90 days behind what's actually happening - like I'd be 3 months into my payment plan before I got a physical letter confirming that I'd set up a payment plan . . .)
You want anecdata - doing it online the last couple of years was so easy and stress-free that I barely even remember it, I applied online, I picked the 6-month (180 days) payment plan, either the webpage refreshed and/or I got an email detailing that I was agreeing to a total payment with penalties and interest of $XX, with $Z per month due every month, I electronically signed the thing, done.
I'm pretty sure you can set up automatic withdrawals but my tax payment issues are cash flow rather than anything else, so I didn't bother, I just put a once-a-month reminder in my phone calendar which kept it in the forefront of my mind enough that I'd remember to keep enough in my account to cover it, and whenever I'd get some extra money via overtime I'd send in a extra payment or pay extra on the due date. Payment via direct debit from my checking account, I had to log into the IRS website & navigate to the right page to arrange for a payment.
they don't seem to get specific until you actually start the application process.)
Well, yeah, they won't, because it does depend on how much you make & how much you owe. When I owe it's generally low 4 figures or less, so while I don't recall having any sort of explicit necessary minimum payment I'm like 90% sure that the 6 month plan was the only one offered to me because I just didn't owe that much. So if I owed like $1000 just by basic math my minimum payment was like $175 ($166.67 on the underpayment plus a small amount for interest & penalties.)
So I can't personally speak to what happens if you're in a situation where you can or should set up a longer term payment plan. (I have done a longer term payment plan, but that was so long ago that I doubt that it's in any way relevant.)
And now I'm gonna grind the axe I always grind when I answer tax Asks - "penalties and interest" can sound scary as fuck BUT IT IS ALMOST ALWAYS THE BEST DEAL. Quarterly interest rates are currently 7%. (I wish I could get 7% interest on everything else in life.) The penalties you owe are a result of some mathematical formula based on how much you owe & the interest rate. You might be able to figure out your penalties using Form 2210 but it's not necessary.
End result is that it's very very very very very likely that paying the IRS penalties and interest will ultimately cost you less than paying by credit card or unsecured personal loan or early withdrawal from retirement accounts or whatever other schemes people come up with because they're freaked out about penalties and interest.
It's fine, you'e fine, they're not out to get you or punish you, it's seriously a bunch of accountants doing their totally normal boring daily jobs. Whatever your tax problems are it's probably the 27th case exactly like it they've handled in the past week.
posted by soundguy99 at 6:28 PM on April 11 [12 favorites]
I did this last year and it was super easy (and I’ll be doing it again this year). I initiated the payment plan before getting a letter from the IRS, but after my accountant filed my taxes. I chose the 6 month interest free plan, and just threw money at it whenever I could until it was paid off. Good luck!
posted by sucre at 6:30 PM on April 11 [2 favorites]
posted by sucre at 6:30 PM on April 11 [2 favorites]
The other option to research is an Offer in Compromise (OIC). If you owe them money with little hope of being able to pay back the full amount but can pay either in one payment or in 3 equal payments some fraction of the actual total (They have formulas for how much they can accept) they may accept an offer of less than the total obligation.
posted by JohnnyGunn at 7:24 PM on April 11 [1 favorite]
posted by JohnnyGunn at 7:24 PM on April 11 [1 favorite]
I've done this recently, and it wasn't hard to set up. I believe they sent me a letter and I went online and set up automatic monthly payments. I'd get a letter in the mail about what I was paying or could check online, I believe. I did call once to ask a question, and the person I spoke to was nice and helpful. Relatively smooth process.
posted by bearette at 8:06 AM on April 12
posted by bearette at 8:06 AM on April 12
You already marked soundguy99 as best answer and I am just here to second that. Everything they said is right in my experience, including the rates and fees, and especially the bit about doing it online. If you end up owing next year, they will tack it onto your existing plan if you're not done with the current one, in my experience. (I am actually an idiot and as such I have to do this generally, so have some direct experience, including again in a few days or so.)
FWIW, you can do the 6 month option; I have not and mine just continue until they're paid off. The length ends up being whatever you owed plus whatever accumulated fees occur divided by how big your payment is. It's better if you do the 6-month option (obvs, because you accrue less fees and interest). But sometimes it's better to do an amount you can definitely afford each month and then pay more as you can. You can definitely add additional payments through irs.gov (at least for now) - it's even reasonably easy to do. In my case, I set up a plan that was a dollar amount that I can take care of without much hassle.
I do the automatic payments. It works like any other automatic payment setup.
If you're going to continue to have additional income that doesn't get withholding, you should plan to pay additional withholding as the year goes on. (Usually quarterly. This is very vague on purpose, you should talk to a tax advisor or accountant for specifics, because there may be other options that work better for you.) If you just, like, flubbed up a W-4 or got a one-time windfall or something, then you don't need to worry about this.
posted by mrg at 1:06 PM on April 12 [1 favorite]
FWIW, you can do the 6 month option; I have not and mine just continue until they're paid off. The length ends up being whatever you owed plus whatever accumulated fees occur divided by how big your payment is. It's better if you do the 6-month option (obvs, because you accrue less fees and interest). But sometimes it's better to do an amount you can definitely afford each month and then pay more as you can. You can definitely add additional payments through irs.gov (at least for now) - it's even reasonably easy to do. In my case, I set up a plan that was a dollar amount that I can take care of without much hassle.
I do the automatic payments. It works like any other automatic payment setup.
If you're going to continue to have additional income that doesn't get withholding, you should plan to pay additional withholding as the year goes on. (Usually quarterly. This is very vague on purpose, you should talk to a tax advisor or accountant for specifics, because there may be other options that work better for you.) If you just, like, flubbed up a W-4 or got a one-time windfall or something, then you don't need to worry about this.
posted by mrg at 1:06 PM on April 12 [1 favorite]
So, update since I just did the payment plan thing yesterday morning:
First you do need to sign up for an id.me account. (You only do this once, it's good for AFAIK the rest of your life.) It is a bit of a hassle, involving collecting various documents and a video call - id.me primary and secondary documents - and IIRC it took like 24 hours to get verified before my account was active. (This is OK, you don't need to set up a payment plan today just because it's Tax Day.)
You need a mobile phone for id.me because every time you log in to your id.me account they'll want to text or call you for additional security.
Given the recent government fuckery I don't know how easy the process will be to set up an id.me account, but again, this is not something you need to do right away, the IRS is not gonna bust down your door because it took a week or two to get an account set up.
Once you've logged into the IRS.gov site with your id.me, it's top menu "Pay", then side menu "payment plan", then the "Apply/Revise as Individual" button.
This time around I picked the "long term" payment plan, it asked me to choose how much per month I'd like to pay and which day each month I'd like it to be due. I picked about 10% of what I owe per month, it gives you options about whether you'd like to set up an automatic withdrawal, or just be responsible for it yourself, clicked the "Apply" button, done. At the bottom of the page there was also a button to make a payment so I went ahead and did that.
As of this morning I have not received an email from the IRS saying whether they've accepted or rejected my payment plan setup, my IRS.gov account lists it as "pending", so I guess we'll see if they decide I need to pay more per month or move to a 6 month plan, or whatever, but (since I already have an id.me account) the whole process took like 10 minutes and no waiting on the phone.
posted by soundguy99 at 6:49 AM on April 15
First you do need to sign up for an id.me account. (You only do this once, it's good for AFAIK the rest of your life.) It is a bit of a hassle, involving collecting various documents and a video call - id.me primary and secondary documents - and IIRC it took like 24 hours to get verified before my account was active. (This is OK, you don't need to set up a payment plan today just because it's Tax Day.)
You need a mobile phone for id.me because every time you log in to your id.me account they'll want to text or call you for additional security.
Given the recent government fuckery I don't know how easy the process will be to set up an id.me account, but again, this is not something you need to do right away, the IRS is not gonna bust down your door because it took a week or two to get an account set up.
Once you've logged into the IRS.gov site with your id.me, it's top menu "Pay", then side menu "payment plan", then the "Apply/Revise as Individual" button.
This time around I picked the "long term" payment plan, it asked me to choose how much per month I'd like to pay and which day each month I'd like it to be due. I picked about 10% of what I owe per month, it gives you options about whether you'd like to set up an automatic withdrawal, or just be responsible for it yourself, clicked the "Apply" button, done. At the bottom of the page there was also a button to make a payment so I went ahead and did that.
As of this morning I have not received an email from the IRS saying whether they've accepted or rejected my payment plan setup, my IRS.gov account lists it as "pending", so I guess we'll see if they decide I need to pay more per month or move to a 6 month plan, or whatever, but (since I already have an id.me account) the whole process took like 10 minutes and no waiting on the phone.
posted by soundguy99 at 6:49 AM on April 15
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- Filed my taxes without paying
- The IRS sent me a statement of what I owed, with info on how to set up a payment plan
- It involved talking to an IRS representative on the phone, who was helpful
- We set up a monthly payment plan for $X amount over two years; in my case a windfall allowed me to pay the remainder early, which I also did over the phone
The IRS is helpful and friendly if your motive is "I want to pay my taxes, I need help figuring out how".Current politics may make it harder to get a hold of someone in the IRS, but that's definitely the way to get things done without guessing. Give 'em a call. They may not be able to give you info until they have your filing, though. That's why I waited until I got the bill.
posted by AzraelBrown at 2:49 PM on April 11 [9 favorites]