Which tax payment plan is right for my business?Published:
Need to set up a tax payment plan for your business? You may be wondering not only if it’s right for you but also exactly which plan to set up. Luckily, there are a few basic questions you can ask yourself when weighing your options.
How Much Do I Owe?
There are two roads you can go down when you owe taxes. If you owe more than $25,000, you have some extra work to do for your tax payment plan. The 433-F form (along with the 9465) you must fill out is extremely detailed and you must give accounts of your total net worth. This includes property owned, bank accounts, and even stocks.
However, if you owe less than $25,000, your life is much easier. You must fill out the Form 9465 alone, which is very simple. Just input some basic personal and tax info and you’re done. In fact, if you owe less than $10,000, then you should be automatically approved.
How Much Can I Pay?
When determining how to set up your tax payment plan, this is one of the most important questions. The reason being is that you should pay as much as possible each month. If you don’t, you will incur more interest the longer you have money due.
You can set up the tax payment plan to run anywhere from a few months to a few years. Again, the longer you wait the more money you’ll owe in the long run. The interest is generally from 5% to 10% per year.
What Are My Other Options?
You have a few things you can do instead of setting up a tax payment plan. If you can pay your taxes all at once or within 120 days, you shouldn’t have to set up a plan. In this case, start thinking about where to get the money if you are unable to pay it with your own.
Is the amount due enough to put on a credit card? Or perhaps can you take out a cash loan from a bank, family member or investor? In both cases, if you have an introductory rate of 0%, you can skip all the interest that you would have acquired on your taxes. Just be sure to make up the difference before the period ends or you’ll get hit with potentially larger interest payments!