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Retirees with surprise IRS bills: Options when you can't pay in full
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TL;DR
- Millions of retirees annually receive unexpected IRS tax bills, potentially causing financial strain.
- Shifting tax rules, RMDs, and Social Security taxation can lead to unanticipated tax liabilities.
- The IRS provides programs to help taxpayers manage balances they cannot pay immediately.
- Short-term payment plans offer up to 180 days to pay, suitable for those needing a short cash flow adjustment.
- Long-term installment agreements spread payments over years, based on a retiree's financial situation.
- An Offer in Compromise (OIC) allows settling debt for less than the full amount, but requires meeting strict eligibility criteria.
- Currently Not Collectible (CNC) status pauses collection efforts for those facing financial hardship.
- Penalty abatement may reduce or eliminate penalties if reasonable cause for non-payment is demonstrated.
- Tax professionals can assist retirees in navigating IRS programs and negotiating with the agency.