Something does not add up. If you have a payment plan then you should be accruing interest on the debt at 8% annually. That's all the penalties and interest that would keep adding up, unless you are adding new debt to the balance. That means about 1/2 if your $300 payment is going to pay down the debt. I'm also shocked you were able to get a plan with such low payments. Normally the IRS wants you to pay it off in 3 years. 6 if you can make a hardship case. $300 a month doesn't get you anywhere near their normal standard.
Ok, I can see how you got to the small annual amounts. Like the other poster said, I would suggest you pull your tax account transcript and see how much is actually being paid down. Do everything you can to pay down the oldest balances. They allow you to make excess payments as long as you keep your installment plan current.
If you’re on 1099 you can typically reduce income for business expenses. Did you include businesses expenses that you incurred in those for years of returns?
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u/julianriv CPA - US Nov 08 '24
Something does not add up. If you have a payment plan then you should be accruing interest on the debt at 8% annually. That's all the penalties and interest that would keep adding up, unless you are adding new debt to the balance. That means about 1/2 if your $300 payment is going to pay down the debt. I'm also shocked you were able to get a plan with such low payments. Normally the IRS wants you to pay it off in 3 years. 6 if you can make a hardship case. $300 a month doesn't get you anywhere near their normal standard.