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Should I make extra payments on my IRS debt first or pay off my debts from smallest to largest?

taxpayer2017- — Wed, 05 Jun 2019 22:38:05 GMT

We owe $26,000 to the IRS. We also have $23,000 in credit card debt, $5,000 in a personal loan from a bank and $6,000 in a 401K loan. Should we make extra payments on the IRS debt first or just pay my debts from smallest to largest? If we need to make extra payments to the IRS, how do we go about doing that when I already have a payment plan with them?

Our payment plan is $361 per month with the IRS.

taxpayer2017- — Wed, 05 Jun 2019 22:38:06 GMT

Our payment plan is $361 per month with the IRS.

This site is for answering tax questions. Your question i...

Texas Roger — Wed, 05 Jun 2019 22:38:07 GMT

This site is for answering tax questions. Your question is related to financial management. You should see a financial planner to help you with this.

We can pay off the IRS in about a year and the credit car...

taxpayer2017- — Wed, 05 Jun 2019 22:38:09 GMT

We can pay off the IRS in about a year and the credit cards and other loans in about a year as well. I was just asking for suggestions if I should make extra payments to the IRS first or pay off the debts from smallest to largest.

Any interest on either type of debt is non-deductible so,...

TomYoung — Wed, 05 Jun 2019 22:38:10 GMT

Any interest on either type of debt is non-deductible so, from a pure "tax perspective" it really doesn't make any difference, as long as you honor your commitments. However, since credit card debt is very expensive compared to almost any other kind of debt then, from a non-tax perspective, I'd say pay off the credit card debt starting with the largest, highest cost debt.

Thanks TomYoung!

taxpayer2017- — Wed, 05 Jun 2019 22:38:11 GMT

Thanks TomYoung!