Shopping!

We All Love to Shop, But Save Money for Your Tax Bill with IRS Payment Plan

Love buying stuff?  You’re not alone!  We all love to shop, and I don’t care who you are: you have your weak spot too.  Even the most frugal amongst us: try as we may, we still let loose once in a while and splurge.  It’s human nature, after all.

Why People Pay Their Taxes Late: What Happened to Us?

But as a nation we have a problem with spending.  We’ve let our obsession with purchasing things get out of hand.  Our collective materialistic nature was over-indulged in the heyday of easy lending.   Loose oversight on mortgages, home flipping,  and easily-procured home equity loans meant lots of people were rolling in cash.  What did they do with it?  Spend spend spend!

We got used to buying stuff.  Lots of stuff.  But now the country has sobered up, lending rules are tighter, and debt is catching up to a lot of people.  It’s harder to get a credit card, harder to get a loan, and bills keep mounting.

Don’t Be Late With Your Tax Bill!

So when it comes to your tax bill with the IRS, some people are in a jam.  If you owe money to Uncle Sam after filing your Federal income tax return, what happens if you can’t pay your tax bill?

Well your credit score is affected for one.  If you still care about getting future loans, buying a home with a mortgage, or getting credit cards then yes your credit score still does matter.  It even affects what mortgage rate you’ll get when you’re finally ready to buy a home.  Having a low credit score will cost you money in the long run.

For another, the IRS will charge you more money too.  You’ll be assessed late fees and penalties for not paying your taxes or for paying your taxes late.

Get an IRS Payment Plan

So what’s a person to do?  Get an IRS payment plan, that’s what.  The IRS doesn’t necessarily want you to get into trouble with the credit reporting agencies and ruing your financial life.  They want to work with you so they get their money and you come out unscathed.  That’s why they have payment plans, also called installment plans.

There Are Two Types of IRS Payment Plans

There’s an IRS installment plan, which is essentially a loan from the IRS that can last as long as six years.  Of course, you’ll be paying interest and fees but far less than if you don’t work out any IRS payment plan at all.

Then there’s a four  month plan, or 120 days.  You pay off your tax ill in that amount of time and of course since it’s a shorter time frame you get charged less interest and no fees.

Let’s take a look at both.

An IRS Installment Plan

If your IRS debt is less than $50,000 you can work out an IRS installment agreement with them.  The Online Payment Agreement Application is available on the IRS website here.  You’ll need your bank account information so you can set up automatic payments with the IRS.

Here are your options for paying on an IRS Payment Plan:

  1. This IRS payment agreement will cost you $52 to set up direct withdrawal from your bank account
  2. …or $105 to have it automatically taken from your paycheck
  3. If your income is low enough, the fee is reduced to $43.  Use IRS Form 13844 Application For Reduced User Fee For Installment Agreements.

You can set up your IRS payment plan on your credit card, too.

You can apply for an IRS Payment plan by going online via the link above, by calling the IRS at the number on the bill you got from them, or by filling out the paper form, IRS Form 9465 Installment Agreement Request

Get 120 Extra Days to Pay Your IRS Bill

If you think you just need some extra time to come up with the money for your tax bill, you can enter an IRS agreement plan for 120 extra days.  That’s four months to get your money together.  You aren’t charged any fees for this agreement but you still get penalties and interest.

TAX

Form 1040 Instructions

I’m glad you’re curious about IRS Form 1040 and its instructions.  That means you’re at least considering doing your own taxes?  Or maybe it means you want to understand the income tax?  Or you want to check something your accountant said or did…whatever the reason hooray for you!

What is the Form 1040?

Well it’s the form used by American taxpayers to file their federal income tax return every year.  Actually there are 3 versions of the 1040; a simple one, a medium one, and a complex one.  Goldilocks would feel right at home.

If you do your taxes with online tax companies you’ll basically be filling out one of the three versions of the 1040, with the Form 1040 instructions built into the software.  You answer questions based on rules spelled out in the 1040 Instructions and the software fills out the form for you.  Some people like to fill out the paperwork themselves, and continue, old style, to fill out and mail paper tax forms.

How Can the Form 1040 Instructions Help me?

Even if you’re taking advantage of today’s wonderful tax software available from many different companies (TurboTax, TaxAct, H&R Block, etc) you still might be able to make use of the Form 1040 Instructions.  For example, you might not be totally sure of how to answer some questions.  Or you might not understand the implications of different answers.  Not sure whether to file married filing separately or married filing jointly?  The Form 1040 Instructions can shed more light on the matter.

Form 1040 Instructions Explain the Difference between 1040, 1040EZ and 1040A

Not that you have to know the difference if you’re just using software, since the program will choose the corrrect Form 1040 for you, but it’s actually a common question:

What form 1040 should I use?

OK the Form 1040 Instructions spell it all out quite clearly here.  They range in complexity from the very simple form 1040 EZ to the full long form 1040.  The 1040 A is somewhere between those two.

Basically it’s a matter of how many credits, deductions and exemptions you’re claiming.  If you claim almost nothing and you don’t have any dependents (aka kids) then you might be able to use the wonderfully short and simple Form 1040EZ.

You can be single or married filing jointly but no other filing status if you want to use the 1040 EZ.  You have to also be under 65.  Your interest income must be less than $1500 and your wages must be under $100,000.  You can’t owe any household employment tax for that nanny or maid you hired last Spring.  You can’t claim any deductions or credits.

Of course it’s not a problem if your tax life is so simple but you use the full Form 1040 anyway.  The IRS won’t care.

Other things the Form 1040 instructions Help you with

Some people just want to know if they have to file an income tax return…if you make under $9,750 (for 2013) then you don’t even have to file.  I guess the IRS figures you’re so poor they’ll let you off the hook for income taxes.  $9,750 is not considered income?  Not sure what the reasoning is.  But in any event, the form 1040 instructions are what give you the threshold amount for that tax year.

The Form 1040 instructions also give you line-by-line instructions, which is nice when you need more information.  With most tax prep programs, you can choose to look at your tax return just as it would appear on the actual IRS paper forms.  If you were unsure of something when you answered a particular question you can look up the corresponding line on the 1040 form and then go to the Form 1040 instructions to read more about how to fill in that line.

i1040