1-800-548-4639What determines your tax installment payment amount? Several factors come to mind. Since every person has a unique financial situation, their tax payment terms are also unique. Lucky for all of us, the government doesn’t require a flat monthly amount for its installment agreements. Here is a look at some of the determinants for installment payments.
- Current earnings: The more money you make, the more you will have to pay each month. At least, that’s the basic theory. If your current income is high and stable, you probably won’t get away with $20 monthly payments.
- Current debts: The IRS will consider your bills and other debts to see how much disposable income you could reasonably pay towards your taxes. In essence, they will calculate a debt to income ratio and go from there.
- Seasonal earnings: If you happen to earn more money during certain parts of the year than others, it factor into your overall payment plan. You won’t be required to pay more at that time. You’ll just have to pay more on average.
Talk to a tax professional about the installments you think you can afford, and he or she will work out the most reasonable plan for your current financial situation.
Authored by the BC Tax Insights Team, this article reflects the collective expertise and experience of our seasoned tax professionals. The Insights Team at BC Tax comprises specialists with a deep understanding of various tax scenarios and solutions. With a focus on providing informative, accurate, and practical insights, our goal is to guide readers through the complexities of taxation and financial planning. Every piece is crafted with the intent to help individuals and businesses navigate the ever-evolving world of taxes, ensuring clarity and confidence in decision-making.
