How to Set Up an IRS Payment Plan

Learn how to set up an IRS payment plan when you owe taxes, including online applications and payment options.

1. Check if you qualify for an online payment plan. You can apply online if you owe $50,000 or less in combined taxes, penalties, and interest. Your tax returns must be filed and current. If you owe more than $50,000, you'll need to call the IRS or mail Form 9465.
2. Choose between short-term and long-term plans. Short-term plans (120 days or less) have no setup fee but you pay the full balance quickly. Long-term installment agreements (6 months to 6 years) have setup fees but smaller monthly payments. Short-term makes sense if you can pay within 4 months.
3. Apply online through the IRS website. Go to irs.gov and search for 'Online Payment Agreement.' You'll need your Social Security number, filing status, and the exact amount you owe. The system will calculate your minimum monthly payment based on your balance and chosen timeline.
4. Set up automatic payments to reduce fees. Choose direct debit from your bank account to cut setup fees in half. Manual payments cost more and you risk missing due dates. The IRS will withdraw your payment on the same day each month until your balance is paid.
5. Keep making payments and stay current on new taxes. Missing payments or owing new taxes can void your agreement. File future returns on time and pay any new taxes owed. Interest and penalties continue accruing on your remaining balance, but at a lower rate than before.