Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
ilove2singpraise
New Member

What is the interest rate and fee amount if I choose to pay my income tax using the installment plan?

I owe close to $2300 for federal and $620 for state tax. I want to know what would be better financially to either charge it to my credit card at 11% interest versus paying it using the payment installment plan.
1 Best answer

Accepted Solutions
MichaelL1
Level 15

What is the interest rate and fee amount if I choose to pay my income tax using the installment plan?

OK let me give you some detail on the IRS as unsure what state you are in.

Note: get the W-4 with the employer to withhold more taxes if you have same income in 2017 so this does not happen again.  

3% interest

6% a year for Failure to Pay

Installment agreement fee ranges from $225 to $31. 

https://www.irs.gov/taxtopics/tc202.html

The IRS charges a user fee of $225 when you enter into a standard installment agreement or a payroll deduction agreement. If you enter a standard installment agreement and choose to pay via direct debit from your bank account, the user fee is $107. If you use the OPA application to request an installment agreement, the user fee is $149. If you use the OPA application to request an installment agreement and choose to pay via direct debit, the user fee is $31 for all taxpayers regardless of income levels. 

Note: The user fee for restructuring or reinstating an established installment agreement is $89 regardless of method of payment.


Source of below: https://www.irs.gov/taxtopics/tc653.html

  • Generally, interest accrues on any unpaid tax from the due date of the return until the date of payment in full. The interest rate is determined quarterly and is the federal short-term rate plus 3 percent. Interest compounds daily. Visit News Release and Fact Sheet Archive, for the current quarterly interest rate on underpayments.
  • In addition, if you file a return but don't pay all tax owed on time, you'll generally have to pay a late payment penalty. The failure to pay penalty is one-half of one percent for each month, or part of a month, up to a maximum of 25% of the amount of tax that remains unpaid from the due date of the return until the tax is paid in full. 

View solution in original post

1 Reply
MichaelL1
Level 15

What is the interest rate and fee amount if I choose to pay my income tax using the installment plan?

OK let me give you some detail on the IRS as unsure what state you are in.

Note: get the W-4 with the employer to withhold more taxes if you have same income in 2017 so this does not happen again.  

3% interest

6% a year for Failure to Pay

Installment agreement fee ranges from $225 to $31. 

https://www.irs.gov/taxtopics/tc202.html

The IRS charges a user fee of $225 when you enter into a standard installment agreement or a payroll deduction agreement. If you enter a standard installment agreement and choose to pay via direct debit from your bank account, the user fee is $107. If you use the OPA application to request an installment agreement, the user fee is $149. If you use the OPA application to request an installment agreement and choose to pay via direct debit, the user fee is $31 for all taxpayers regardless of income levels. 

Note: The user fee for restructuring or reinstating an established installment agreement is $89 regardless of method of payment.


Source of below: https://www.irs.gov/taxtopics/tc653.html

  • Generally, interest accrues on any unpaid tax from the due date of the return until the date of payment in full. The interest rate is determined quarterly and is the federal short-term rate plus 3 percent. Interest compounds daily. Visit News Release and Fact Sheet Archive, for the current quarterly interest rate on underpayments.
  • In addition, if you file a return but don't pay all tax owed on time, you'll generally have to pay a late payment penalty. The failure to pay penalty is one-half of one percent for each month, or part of a month, up to a maximum of 25% of the amount of tax that remains unpaid from the due date of the return until the tax is paid in full. 
Dynamic AdsDynamic Ads
Privacy Settings
v