Extension to Pay Taxes

YES- The IRS announced a new six month payment extension form 1127-A which gives you six more months to pay also and avoid the failure to pay penalty. This form is only available for those taxpayers who are unable to pay but were unemployed in the current year for at least 30 consecutive days during the current year or were self employed and suffered greater than a 25% reduction in business income in the current year. To qualify you must also meet certain income limitations. To request an extension of time to pay you must file this form 1127-A separately. Do not attach it to your tax return or do not attach it to form 4868, the other extension form. Payment must be paid in full by Oct 15, 20XX or you will retroactively be assessed penalties and interest.

If you know you need more than 120 days you can file Form 9465 – an Installment Agreement Request and attach this form to page 1 of your tax return. You can decide how much you want to pay the IRS monthly, but make your payments as large as possible to limit the interest and penalties that will continue to be assessed until you pay the outstanding balance in full.

The failure-to-pay penalty is generally half of 1 percent per month with an upper limit of 25 percent. You can borrow the money somewhere else. You can pay your taxes with a credit card, however the merchant processing fees of approximately 3% will be your responsibility

If you can pay the IRS in less than 120 days from April 15, you should file your return and send in as much money as you can afford to send in with the return. The IRS will send you a bill every 30 days up to 120 days which at that time you will receive the dreaded certified letter saying you are out of time.