IRS and penaltys and installments
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I owe a large amount of money to the IRS. Can I pay what I owe in installments?
Unfortunately, not everyone gets a refund during tax season. If you are in the unenviable position of owing a large amount of money to the IRS, you may be able to pay what you owe through an installment agreement with the IRS.
With an installment agreement, the amount of your payment will be based on how much you owe in unpaid taxes and your ability to pay that amount within the agreement’s time frame. Although you are generally allowed up to 72 months to pay, your plan may be for a shorter length of time.
To request an installment agreement, fill out Form 9465, Installment Agreement Request, and attach it to your tax return, or mail it by itself directly to your designated Internal Revenue Service Center. If your balance due is not more than $50,000, you can apply for an installment agreement online at IRS.gov.
The IRS will generally let you know within 30 days after receiving your request whether it is approved or denied (if you apply online, you’ll get immediate notification of approval). If the request is approved, the IRS will send you a notice detailing the terms of your agreement. You will also be required to pay a fee of $120 ($52 if you make your payments by direct debit). You can make your payments by check, money order, credit card, payroll deduction, or direct debit from your bank account.
Keep in mind that even if your request for an installment agreement is granted, you will still be charged interest and may be charged a late-payment penalty on any tax not paid by its due date. This interest and any applicable penalties will be charged until the balance you owe to the IRS is paid in full.
It is important to realize that the fees and interest charged by the IRS for an installment agreement can add up. As a result, before you enter into an installment agreement, the IRS suggests that you consider other alternatives, such as getting a bank loan or using available credit on a credit card.
Will I have to pay a penalty tax if I don’t have qualifying health insurance?
It depends. One of the main objectives of the health-care reform law, the Patient Protection and Affordable Care Act (ACA), is to encourage uninsured individuals to obtain health-care coverage. As a result of the ACA, everyone must have qualifying health insurance coverage, qualify for an exemption, or pay a penalty tax. This requirement is generally referred to as the individual insurance or individual shared responsibility mandate.
Health insurance plans that meet the requirements of the ACA generally include employer-sponsored health plans, government health plans, and health insurance purchased through state-based or federal health insurance exchange marketplaces.
Individuals who are exempt from the individual insurance mandate include:
Those who qualify for religious exemptions
Certain noncitizens
Incarcerated individuals
Members of federally recognized American Indian tribes
Those who qualify for a hardship exemption
Individuals may also qualify for an exemption if:
They are uninsured for less than three months
The lowest-priced insurance coverage available to them would cost more than 8% of their income
They are not required to file an income tax return because their income is below a specified threshold
For tax year 2014, the penalty tax equals the greater of 1% of the amount of your household income that exceeds a specific amount (generally, the standard deduction plus personal exemption amounts you’re entitled to for the year) or $95 per uninsured adult (half that for uninsured family members under age 18), with a maximum household penalty of $285. In 2015, the percentage rate increases to 2%, the dollar amount per uninsured adult increases to $325, and the maximum household penalty increases to $975.
Please call me to find out more information, Jennifer Williams, President J. Williams Personal Financial Planning: 413 S. Curry St, Tehachapi, California. Office Phone 661-822-7517 Office Email: jennifer.williams@npbfg.com Jennifer is a Registered Financial Consultant. She has over 20 years of experience in the industry.
Article is Courtesy of Forefiled, LLC Securities offered through NPB Financial Group, LLC. A Registered Investment Advisor/Broker-Dealer Member FINRA, MSRB, and SIPC.
