First time paying income tax - HELP!?

Question

My hus and I have never had to pay in, weve always had a return, but this year I forgot to switch our exemptions, (claimed 10! all year, duhhhmmmbbb...) and my hus should make 95ish k. My ? is, we are prob looking at like 6 or 7 k to pay, are they due ON Ap 17 or can we file extension or what is the payment plan like, (ie - int.rate, length of loan and all that)

Answer 1

An extension is an extension to file, not to pay.

If your balance is under $10k, the IRS will automatically accept an installment agreement.

The interest rates are reasonable. I don't know the exact rate right now but I think it is about 8%. The time frame is usually 3 years or less.

Answer 2

Yes the taxes are due on April 17.
An extension does not mean you have an extension to pay only to file. You are supposed to send in your best estimate of what you owe with your extension application.
There is a $45 charge for the payment plan and the Irs does not have to accept one. Again you are supposed to send in as much of what you owe and pay the rest off in as short a time as possible. You have to state how much you will pay each month and do need to stick to that. The interest on the entire amount will start on April 17 and will continue until the entire amount is paid. The best I recall the interest rate is about 6%. They like to have it paid off in a year but depending on the amount they might go 2 years. If they do that just be aware that they will keep next years refund to pay off what you owe from this year.

As an additional note, although most people are never charged with it, it is illegal to claim more exemptions than you are entitled to on W-4 forms. I am assuming of course that you claimed 10 just so you wouldn't have as much held out and are not actually entitled to them.

Answer 3

As a final note, your employers may receive "lock in" letters preventing you from playing games with your W-4 in the future.