IRS - Payment Options

Taxpayers that need to pay a tax bill have payment options:

• Phone - Pay by phone or online using a credit card, see Electronic Payment Options.
• Mail - Pay by check or money order made payable to the “United States Treasury.” Be sure to include your name, address, Social Security number listed first on the tax form, daytime telephone number, tax year and form number. Complete and include Form 1040-V, Payment Voucher, when mailing your payment to the IRS.

If you owe tax with your federal tax return, but can’t afford to pay it all when you file, the IRS has options to help you keep interest and penalties to a minimum. File your return on time and pay as much as you can with the return, then:

• Request an installment agreement - Use the Online Payment Agreement application at http://links.govdelivery.com/track?type=click&enid=ZWFzPTEmbWFpbGluZ2lkPTIwMTIwNDE2LjY4NzY4MDEmbWVzc2FnZWlkPU1EQi1QUkQtQlVMLTIwMTIwNDE2LjY4NzY4MDEmZGF0YWJhc2VpZD0xMDAxJnNlcmlhbD0xNjk1MjY4NiZlbWFpbGlkPWxzdWFyZXpAdGF4ZmxhLmNvbSZ1c2VyaWQ9bHN1YXJlekB0YXhmbGEuY29tJmZsPSZleHRyYT1NdWx0aXZhcmlhdGVJZD0mJiY=&&&131&&&http://www.irs.gov or by file Form 9465, Installment Agreement Request with your return. The IRS charges a user fee to set up your payment agreement. Taxpayers can set up an installment agreement with the IRS by going to the On-line Payment Agreement (OPA) page on IRS.gov and following the instructions.
• Additional time to pay - You may request a short additional time to pay your tax in full using the Online Payment Agreement application on http://links.govdelivery.com/track?type=click&enid=ZWFzPTEmbWFpbGluZ2lkPTIwMTIwNDE2LjY4NzY4MDEmbWVzc2FnZWlkPU1EQi1QUkQtQlVMLTIwMTIwNDE2LjY4NzY4MDEmZGF0YWJhc2VpZD0xMDAxJnNlcmlhbD0xNjk1MjY4NiZlbWFpbGlkPWxzdWFyZXpAdGF4ZmxhLmNvbSZ1c2VyaWQ9bHN1YXJlekB0YXhmbGEuY29tJmZsPSZleHRyYT1NdWx0aXZhcmlhdGVJZD0mJiY=&&&132&&&http://www.irs.gov. Taxpayers who request and are granted an additional 120 days to pay the tax in full generally will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time. There is no fee for this short extension of time to pay.

Details on IRS Collection and Other Information
A series of eight short videos are available to familiarize taxpayers and practitioners with the IRS collection process. The series “Owe Taxes? Understanding IRS Collection Efforts”, is available on the IRS website, http://www.irs.gov/.

The IRS website has a variety of other online resources available to help taxpayers meet their payment obligations:

• Tax Tip: Ten Tips for Taxpayers Who Owe Money to the IRS

Links:

• Form 9465, Installment Agreement Request (PDF)
• Electronic Payment Options 
• Pagina principal de opciones de pago electronico 
• Online Payment Agreement Application 

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Energy-Efficient Home Improvements

The IRS would like you to get some credit for qualified home energy improvements this year. Perhaps you installed solar equipment or recently insulated your home? Here are two tax credits that may be available to you:
1. The Non-business Energy Property Credit  Homeowners who install energy-efficient improvements may qualify for this credit. The 2011 credit is 10 percent of the cost of qualified energy-efficient improvements, up to $500. Qualifying improvements includeadding insulation, energy-efficient exterior windows and doors and certain roofs. The cost of installing these items does not count. You can also claim a credit including installation costs, for certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass fuel. The credit has a lifetime limit of $500, of which only $200 may be used for windows. If you've claimed more than $500 of non-business energy property credits since 2005, you can not claim the credit for 2011. Qualifying improvements must have been placed into service in the taxpayer’s principal residence located in the United States before Jan. 1, 2012.

2. Residential Energy Efficient Property Credit This tax credit helps individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and wind turbines. The credit, which runs through 2016, is 30 percent of the cost of qualified property. There is no cap on the amount of credit available, except for fuel cell property. Generally, you may include labor costs when figuring the credit and you can carry forward any unused portions of this credit. Qualifying equipment must have been installed on or in connection with your home located in the United States; fuel cell property qualifies only when installed on or in connection with your main home located in the United States.
Not all energy-efficient improvements qualify so be sure you have the manufacturer’s tax credit certification statement, which can usually be found on the manufacturer’s website or with the product packaging.

Also, note these are tax credits and not deductions, so they will generally reduce the amount of tax owed dollar for dollar.

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Standard Deduction vs. Itemizing: Seven Facts to Help You Choose

Each year, millions of taxpayers choose whether to take the standard deduction or to itemize their deductions. The following facts from the IRS can help you choose the method that gives you the lowest tax.

1. Qualifying expenses - Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. If the total amount you spent on qualifying medical care, mortgage interest, taxes, charitable contributions, casualty losses and miscellaneous deductions is more than your standard deduction, you can usually benefit by itemizing.

2. Standard deduction amounts -Your standard deduction is based on your filing status and is subject to inflation adjustments each year. For 2011, the amounts are:

        Single     $5,800
        Married Filing Jointly   $11,600
        Head of Household   $8,500
        Married Filing Separately  $5,800
        Qualifying Widow(er)  $11,600

3. Some taxpayers have different standard deductions - The standard deduction amount depends on your filing status, whether you are 65 or older or blind and whether another taxpayer can claim an exemption for you.

4. Limited itemized deductions - Your itemized deductions are no longer limited because of your adjusted gross income.

5. Married filing separately - When a married couple files separate returns and one spouse itemizes deductions, the other spouse cannot claim the standard deduction and therefore must itemize to claim their allowable deductions.

6. Some taxpayers are not eligible for the standard deduction - They include nonresident aliens, dual-status aliens and individuals who file returns for periods of less than 12 months due to a change in accounting periods.


Links:

• Publication 17, Your Federal Income Tax (PDF)

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Three Tips for Reducing Tax-Time Stress

Tax preparation doesn't need to give you a headache. There are several ways to make it easier on yourself. The IRS offers six tips to help make your tax-filing experience a breeze this year.

1. Don’t procrastinate. Resist the temptation to put off your taxes until the very last minute. Rushing to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error.

2. Don’t panic if you can’t pay.  If you can’t pay the full amount of taxes you owe by the mid-April deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. More than 75 percent of taxpayers eligible for an Installment Agreement can apply using the web-based Online Payment Agreement application available at http://www.irs.gov/. To find out more about this simple and convenient process, type “Online Payment Agreement” in the search box.You can also contact the IRS to discuss your payment options.

6. Request an extension of time to file – but pay on time.  If the deadline clock is ticking, you can get an automatic six-month extension through Oct. 15. However, this extension of time to file, which must be filed or postmarked by the April 17 deadline, does not give you more time to pay any taxes due. If you have not paid at least 90 percent of the total tax due by the April deadline you may also be subject to an estimated tax penalty. .

Links:

• Online Payment Agreement
• Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return

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