If you are in tax debt and cannot pay your entire tax debt amount in a single payment, you can consider paying it in monthly installments using IRS payment plans, known as Installment Agreements. There are many kinds of Installment Agreements based on the paying ability of taxpayers.
When taxpayers have tax debt of under $10,000, the IRS does not require extensive sharing of financial information such as a financial statement. For larger tax debts, the IRS requires financial information to determine the amount of debt to be paid in monthly installments.
The IRS encourages you to pay in full, but if you want to save on IRS penalties and interest while paying your tax debt in installments, you can make large monthly payments and pay your entire tax debt in as few months as possible. As the IRS charges penalty on tax debt every month, paying in fewer months will help you to avoid further penalties. Making one large payment at the beginning, or making large payments every month will also lessen the penalties you will be paying on tax debt.
Even when you have the ability to pay your entire tax debt, planning the payments and exploring plans to reduce/remove penalties such as penalty abatement will help you to reduce your total tax debt amount. Therefore, plan your payments and choose a tax debt payment plan after careful consideration.