Tax Extensions and IRS Payment Plans in Texas

Two different situations send people looking for this page: needing more time to get a return done, and not being able to pay everything that is owed. What an extension does and does not cover, and what a payment plan involves, are IRS rules that depend on the details, so this guide leaves them to the IRS pages listed under Official sources below. What it covers instead are the tools: how an extension is requested, how to see what you owe, and how a payment plan is applied for.

Moreno Financial Services prepares returns for households and small businesses across Central Texas through our tax preparation services, including catch-up filings for prior years. We do not act for clients before the IRS. If a situation calls for someone with IRS representation rights, we will tell you.

Ways the IRS lets you request an extension

The IRS describes more than one route. One is to pay what you owe with an online payment option and check the box saying the payment is part of filing for an extension; the IRS then gives you a confirmation number for your extension to keep with your records. The payment options themselves are covered in our guide to paying the IRS during the year.

Another route is IRS Free File, which the IRS says can be used to request an extension electronically, with no income limit for extensions, through either its guided software or its fillable forms. A third is sending the extension request electronically through tax software. The IRS asks for last year's adjusted gross income to verify that request, then sends an electronic acknowledgement that it accepted the filing, and it says to keep that acknowledgement. Before relying on an extension, read the IRS extension page, listed below, on how an extension to file relates to paying what you owe.

Seeing what you owe

The IRS online account for individuals shows balances owed to the IRS by tax year. If you have just made a payment, the IRS notes it can take some time to be credited to the account, so a balance that looks unchanged right after paying may simply not have caught up yet. Creating an online account requires photo identification, so have it ready before you start.

Applying for a payment plan online

The IRS takes payment plan applications online. It says you will need an online account, and a direct debit plan needs your bank routing and account numbers. If you filed recently and no notice has arrived yet, the application uses the balance due shown on your return. Once the application is complete, the IRS says you get an immediate answer on whether the plan is approved.

Two more points from the same IRS pages: sole proprietors and independent contractors apply for a payment plan as individuals, and the online account can also set up a payment plan for the amount you expect to owe for the current tax year. The IRS payment plans page, listed below, sets out the plan types, their fees and their limits.

If paying is hard

The IRS has a short question tool that lists options for resolving a tax debt, and in-person help is available by appointment at a local IRS Taxpayer Assistance Center. The Taxpayer Advocate Service suggests making a list of your assets and your monthly income and expenses before deciding how much you can pay each month. If you cannot pay anything yet, the IRS asks you to have your financial information ready before you call, such as pay stubs, lease or rental agreements, mortgage statements, car lease or loan papers and utility bills.

If your case qualifies, the Taxpayer Advocate Service, at 1-877-777-4778 or taxpayeradvocate.irs.gov, may be able to help. Low Income Taxpayer Clinics, independent of both the IRS and the Taxpayer Advocate Service, help taxpayers within their income guidelines for free or a small fee. Our guide to choosing a tax preparer covers what to ask any preparer.

When a notice arrives

If the IRS writes to you about a balance, the IRS says to review the notice carefully and keep it for your records. The notice or letter number sits in the right corner of the page, and the IRS has a page for looking up what each one means. If you get a notice from the IRS, call us. We'll help you understand what it says and tell you if you need someone with IRS representation rights. Our guide to IRS notices covers the first steps.

Disaster relief

The IRS lists tax relief for disaster situations on its own page, with state-by-state entries that include Texas. If your county has been hit by a disaster, check that page before relying on any date you have seen elsewhere, because relief is announced for specific areas and the details are on the IRS entry itself.

A checklist of what to keep

Whatever route you take, keep the paperwork that proves it, together in the folder for that tax year:

• The extension confirmation number, or the IRS acknowledgement for an extension request sent electronically
• Confirmation numbers for every payment made
• The payment plan approval and the terms the IRS shows you
• Every notice or letter the IRS sends, in the order it arrived
• Last year's return, for the adjusted gross income the IRS asks for