If you`re struggling to pay off your tax debt to the IRS, an installment agreement could be a viable option for you. With an installment agreement, you can make monthly payments on your tax debt over a set period of time, making it easier to manage your finances. However, if you find yourself with some extra cash on hand, you may be wondering if you can pay off your IRS installment agreement early.
The good news is that, yes, you can pay off your IRS installment agreement early. In fact, paying off your installment agreement early can save you money on interest and penalties, as well as provide you with peace of mind knowing that your tax debt is fully paid off.
When you enter into an IRS installment agreement, the terms of the agreement will include the amount of your monthly payments and the length of time you have to pay back your tax debt. If you decide to pay off your installment agreement early, you will need to calculate the remaining balance and pay that amount in full.
To do this, you can call the IRS directly or log onto the IRS website to access your account information. Once you have your account information, you can calculate the remaining balance on your installment agreement and make a payment for that amount.
It`s important to note that when you make an early payment on your installment agreement, it`s essential that you specify that the payment is to be applied to the principal balance. Otherwise, the payment may be applied to future monthly payments, which will not help you pay off your debt faster.
Another benefit of paying off your IRS installment agreement early is that it can help improve your credit score. By paying off your tax debt early, you`ll be able to show potential creditors that you`re responsible with your finances and can make timely payments.
In summary, paying off your IRS installment agreement early is a great way to save money on interest and penalties, improve your credit score, and have peace of mind knowing that your tax debt is fully paid off. If you`re considering making an early payment, be sure to contact the IRS directly to ensure that the payment is applied to the principal balance and not future monthly payments.
