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What Is the Minimum Monthly Payment for an IRS Installment Plan?

Updated for Tax Year 2014


OVERVIEW

Can't afford to pay your income taxes? You may be able to qualify for an installment plan with the Internal Revenue Service. The minimum monthly payment for your plan depends on how much you owe.


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If you can’t afford to pay your taxes, you may be able to qualify for an installment plan with the Internal Revenue Service. An installment plan allows you to pay your taxes over time while avoiding garnishments, levies or other collection actions. You'll still owe penalties and interest for paying your taxes late, but it can help make the payments more affordable. The minimum monthly payment for your plan depends on how much you owe.

Minimum monthly payment

You can apply for an installment agreement online, over the phone, or via various IRS forms. To some degree, you get to choose how much you want to pay every month. The IRS will ask you what you can afford to pay per month, encouraging you to pay as much as possible to reduce your interest and penalties. If you choose not to answer, select too low of an amount, or let the IRS pick a payment amount for you, your minimum payment will be the amount that you owe divided by 72.

Fees for IRS installment plans

If you can pay off your balance within 120 days, it won't cost you anything to set up an installment plan. Otherwise, you'll owe $52 for setting up a direct debit agreement with the IRS, or $105 for a standard or payroll deduction agreement. If you're a lower-income taxpayer, you may be able to reduce the fee to $43.

Balance of $10,000 or below

If you owe less than $10,000 to the IRS, your installment plan will generally be automatically approved as a "guaranteed" installment agreement. Under this type of plan, as long as you pledge to pay off your balance within three years, there is no specific minimum payment required. For balances above $10,000, you may have to provide additional information in order to qualify.

Balance between $10,000 and $25,000

With a balance due above $10,000, you can qualify for a streamlined installment plan. While acceptance isn't guaranteed, the IRS doesn't usually require additional financial information to approve these plans. With a streamlined plan, you have 72 months to pay. A minimum payment does kick in, equal to your balance due divided by the 72-month maximum period.

Balance between $25,000 and $50,000

Qualifying for a plan with a higher balance due requires additional information. The IRS will want to know about your income and expenses on Form 9465-FS. Your minimum payment will be your balance due divided by 72, as with balances between $10,000 and $25,000.

Balance over $50,000

The IRS will conduct a more thorough review of your finances if you owe more than $50,000 in taxes. On Form 433-A, you'll have to provide detailed information on your investments, assets, income and bank accounts. If you have any meaningful assets, you might have to sell some to pay down your outstanding balance. Your minimum payment in this situation will be unique to the specific agreement you strike with the IRS.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

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