When you owe the IRS, they put big pressure on you to pay immediately or to set up a payment plan. Watch out! The fee to set up a plan is $105! If you can pay your balance in three months or less, send what you can now, wait for the next bill, send more, then pay the balance with the third billing. Save the $105.
If you will need more time, ask for a payment plan. If you agree to have payment debited directly from a checking account, the cost to set up the plan drops to $52.
IRS charges interest, plus a “late payment” penalty on all balances. Interest is currently 5%. The penalty for paying late adds 6%, but is often cut in half for payment plans.
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