The best advice when faced with this situation is to be straightforward with the IRS. Installment plans for amounts up to $10,000 can be arranged with the IRS. To qualify, taxpayers must have filed his or her tax returns in a timely fashion and paid any due taxes over the past five years.
Taxpayers who owe the IRS more than $10,000 must get approval from a district office of the IRS and be able to provide the government with additional financial records and other information.
Form 9465 id used to file a request for an installment payment agreement. Interest charges, late penalties and a $105 application fee apply; an expensive option to say the least.
An additional option is to make a withdrawal from an IRA or other type of retirement account. Keep in mind taxes, interest charges and penalties on a withdrawal can add up to cost more than what the IRS would charge you. A home equity credit line is one other option to be considered; just ensure that your home is not at risk.
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