+13 votes
by (1.2k points)
Hi All!  I have 2 scenarios: 1.Hi All! I have 2 scenarios: 1. Does anyone have experience with owing the IRS for taxes? My boyfriend didn’t file last year due to owing a lot of money & personal reasons, so he filed it this year. He doesn’t have the funds to pay the IRS upfront, we know he will be getting hit with interest/penalty fees. We are also aware that payment plans are an option. So I guess my main question is, what are the monthly payments like (are they a percentage of what you owe each month to pay off in 12months, etc. )? If you’ve experienced this and don’t mind sharing, what we’re you penalty & interest fees like? 2. He has student loans that are going to collections, a small amount of only about 5k. Has anyone experienced their loans going to collections? Would it be best for his credit to refinance and do a personal or do a payment plan? We currently rent an apartment but are hoping to buy a house in about a year, so I’m not sure if having the new loan as a small debt is best. I’m also not even sure if he sets up a payment plan if it’ll hit his credit score as a delinquency. Thanks for the help!  
Hi All!  I have 2 scenarios: 1.

9 Answers

+10 votes
by (5.8k points)
I owed like $2000. I setup a payment plan where I was able to say how much I could pay a month. I’m not sure what the penalty and fees were but I ended up paying it off early because I actually got refund the next year and they just took it from there.  
+8 votes
by (3.3k points)
I am currently on a payment plan. While the interest and penalties are quite high as long as you pay it each month on the plan, you will be okay and you can pay more whenever you want. I have been on a payment plan with them for $3k owed and I think they give you 5 years to pay and I was on an arrangement of $50 a month. And you can pay it all online.  
by (1.2k points)
@glee10 very helpful, thank you! we were worried it’d have to be paid off before next year.  
by (3.3k points)
@maier You are welcome! The interest and penalties are a pain, but it makes you want to pay it off faster.  
+2 votes
by (230 points)
My boyfriend owes $6000 to the IRS and he is on a $200 a month payment plan. He’s paid $1100 so far and the balance went down $500. If student loans go to collections they will garnish wages. You can set up a payment plan through the department of education on defaulted loans and they will stop garnishment after 5 payments and get out of default after 12 payments. It goes by your income as well.  
by (1.2k points)
@vespiary34 for the IRS, did they decreased the balance because he over paid or did it decrease because of the interest? Do the loans go straight to default once they’re sent to a collector?  
+6 votes
by (880 points)
I owed over 3k and was on a payment plan. I paid $50 a month. This was the first year I got a refund and everything was paid in full with them. They are very helpful if you call them. I know it’s scary and can be overwhelming, but I generally spoke with some very helpful and nice people every time I called them. As far as student loans, well that’s a whole other thing. I currently owe about 60k in student loans and feel like I’ll never get them paid. These are the biggest stress in my life. I know you can work out payment plans and even look into income based repayment.  
0 votes
by (1.7k points)
I set up my payment plan with the IRS online. I said how much I could afford to pay a month (I can't remember if they gave a recommendation or not), but it is automatically taken out of my bank account. You can mail them in too or go in each month and pay online, but I'd rather know it is automatically paid so i don't forget. I think the penalty is 0. 5% per month. i can't remember interstate's. It's pretty low. I pay $200/mo.  
by (1.2k points)
@heterolecithal that’s really helpful, thank you!  
+4 votes
by (1.7k points)
Both places will set up payment plans at a reasonable cost for you. The IRS will also take any money owed from your tax refund and you have 3 years to file so if he files the one from last year and this year the money he owes will be offset with those funds and you wouldn;t have to worry about it unless what he owes is more than both refunds. Iw ould just use that refund money to settle that IRS debt.  
+1 vote
by (5.7k points)
Am in Canada and CRA only lets you split your payment plan by 12 months! Judging by the comments it seems like the IRS is more lenient so good for you! As for collections, it has already hit his credit score. And if he settles with them, or pays it off with them, it'll show that too. So if he ever plans to borrow money for a house, they will see this and ask about it or just deny him a loan. If you fail to pay collections they will garnish wages. It would actually be best to get in touch with the institution he owes money to and make a payment plan with them. It's never too late to do this. And once it's done make sure to ask them to close his account with the collection agency.  
+1 vote
by (970 points)
I owed $5, 500 grand as of last summer. I was able to get on their payment plan. $85. 03 a month and due to being low income they waived the fee they charge for setting up the plan for me. (or maybe significantly reduced it. ) For the most part my experience was extremely positive. They’ll hold any returns and apply it to the balance (treasury offset) Student loans (through the Dept of Ed) will also go into treasury offset. I had $40k worth of loans that is now $108kish (22k is just the fees from default). they show no mercy. even with me letting them know I was a DV survivor and offering the paperwork from the police department (police report). Don’t let them default.  
+11 votes
by (8k points)
Have him file. He can set up a payment plan online. He should Call the student loan place and see what it would take to Make him current. Take a small loan for only the amount to get current if he needs to. If he can't pay his current bills i don't think a house is a great idea. Even when we built a brand new house there were many unexpected expenses.  
by (1.2k points)
@daub1 he did file! just not sure what to expect as far as penalty fees/interest goes. we’d get a house together, he’s up to date with current bills. he has a past and is slowly trying to eliminate everything from there by paying everything off but also trying to keep highest to lowest priority in mind with not effecting his credit score negatively. we live together now and i don’t like renting. i was a finance/econ major & i work in finance. i thought i was pretty good with budgeting and organizing both of our bills but then i joined this group and learned about how much i don’t actually know!  
by (8k points)
If he filed. Wait u til he gets a bill. He can always go to IRS. gov and make payments-even when he’s not on a payment plan. Tell hi. Go search direct pay, it’s a no fee way to make payments.  
by (1.2k points)
@daub1 thank you!  
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