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Best Tax Relief Options If I Owe $16,000 to $25,000 to the IRS


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By Chris Huntley

Last updated 10/29/2019


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Summary: There are two great ways to pay back the IRS if you owe $16,000 to $25,000 in taxes; 1) set up a payment plan or 2) get your debt forgiven.  Let's review your best options based on your situation.

If you owe $16,000 to $25,000 in taxes to your state or the IRS and aren't sure the best way to pay them off.

If you've asked:

  • What's the cheapest way to pay off the IRS?
  • Can my tax debts be forgiven?
  • Can I solve this on my own or do I need professional help?
  • How do I stop the letters and other IRS actions?

You're in the perfect place!

In this article, we'll look at all your best options to pause IRS collection activities immediately including applying for debt forgiveness (Offer in Compromise), setting up a payment plan (Installment Plan), bankruptcy, and considerations for doing it yourself (DIY) or seeking help from a tax relief company.

Key sections:

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No Money to Pay the IRS?

Get a free consultation with a tax relief expert to see if you qualify for the Fresh Start.

It's quick, easy, and free.

Real quick:  here's what this article is NOT...

It's not another scare tactic telling you how the IRS can garnish your wages or file a tax lien on your property.

You likely already know this, and are probably already feeling quite threatened by the IRS, and now you need answers!

By the end of this article, you'll be able to make a great decision about your next step whether it will be on your own or choosing to hire an expert to help.

IRS Tax debt relief If I Owe 16000 to 25000 Dollars

The Big Problem Owing $16,000 to $25,000

Here's the brutal truth about having $16,000 to $25,000 of IRS tax debt.

The IRS suspects that since you accumulated that much due in taxes, clearly you made some good money along the way, and they automatically assume you can afford to pay your taxes!

But the truth is:

You're reading this article because you don't have $17,000 or $24,000 sitting around to pay the IRS back.

If that's true, there are many options you can take to get the IRS off your back and end your tax problems including:

  • Setting up an IRS payment plan
  • Settling your debt for less
  • Use a personal loan or retirement funds
  • Bankruptcy

As we'll see below, bankruptcy will probably not be necessary for most situations, so we'll spend the rest of this article covering payment plans, settling your debt for less, and other ways to pay back the IRS.

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See if you qualify for tax relief.  Get a free consultation with a tax relief expert to see if you qualify today.

It's quick, easy, and free.

Option 1: Payment Plan (See Monthly Payments Chart Below)

Let's say you owe $18,000 or $19,000 to the IRS, but don't have that kind of money laying around to pay them back.

Give yourself a break.  8% of all U.S. taxpayers are delinquent.  You are not alone!

The good news is the IRS allows you to set up a payment plan, known as an Installment Agreement, which you can apply for using IRS Form 9465.

So even if you can't afford a lump sum payment of $16,000 or $22,000, you may be able to set up a payment plan with monthly payments that you can afford.  The beautiful thing about the installment plan is they let you pay over 72 months (6 years).

Installment Plan Monthly Payments

Here are some sample monthly payments including the qualifications for each and the forms needed.  If you cannot afford these payments, you should skip to the next sections to see your other options.

Please note from $16,000 to $24,000, you won't see any changes in the qualifications or forms needed.  In fact, they're even the same as if you owe the IRS $10,000 to $15,000 in taxes.  But at $25,000 we have some new requirements.

Amount Owed

*Monthly Payment

Qualification/ Form(s) Needed

Get Help from a Tax Expert

If you owe $16,000

$222.22

Streamlined/

Form 9465

If you owe $17,000

$236.11

Streamlined/

Form 9465

If you owe $18,000

$250.00

Streamlined/

Form 9465

If you owe $19,000

$263.89

Streamlined/

Form 9465

If you owe $20,000

$277.78

Streamlined/

Form 9465

If you owe $21,000

$291.67

Streamlined/

Form 9465

If you owe $22,000

$305.56

Streamlined/

Form 9465

If you owe $23,000

$319.44

Streamlined/

Form 9465

If you owe $24,000

$333.33

Streamlined/

Form 9465

If you owe $25,000

$347.22

Must Qualify/

Form 9465-FS

Parts I and II

*Monthly payment is an estimate only and does not include up-front application fee.  The IRS accepts a high percentage of installment plan requests, but acceptance is not guaranteed.  We highly recommend you speak to a tax expert from Optima Tax Relief prior to entering into an Installment agreement or if you cannot afford the monthly payments above.

Get a free second opinion!

Why Set Up an Installment Agreement:

There are many benefits to a payment plan.

  • Manageable monthly payments
  • Stress relief of getting the IRS off your back
  • Pauses IRS collection attempts

Just be aware that if you enter into an installment agreement and then have difficulty paying them on time, (if you default) the IRS is notorious for demanding the full balance you owe or filing tax liens and IRS levy actions. This may be one reason to try to offer them a lower amount than what you owe them.  (Offer in Compromise)

Quick Tip:

Once you start an installment plan, you will have a harder time qualifying for debt forgiveness (Offer in Compromise) later.  We recommend you speak to an expert to see if you qualify for tax relief first.

Qualification and Setup

For $16,000 to $24,000, acceptance of your installment plan is called "Streamlined."  This means it's a quick application process but approval is not guaranteed.  If you owe $25,000 or more to the IRS, you will fill out an additional section in Form 9465, and each application will be manually reviewed for approval. 

In either case, you need to be up to date on all tax filings and other taxes owed, and you must not have already requested an installment agreement in the past 5 years.

Furthermore, if the IRS deems you can pay your taxes, they will not approve the request.

Best way to pay off 16000 to 25000 IRS tax debt

Fees & Application:

If you owe $16,000 to $24,000, you will use Form 9465 to apply and only need to fill out Part I.

If you owe, $25,000, you need to also complete Part II.

Setup fees range between $31 to $225, depending on whether you set up direct debit from your bank or pay by check, and whether or not you use their online application.

The absolute cheapest way to go is to use online payment agreement (OPA) application at IRS.gov/OPA and set up a direct debit, which only costs a one-time $31 setup fee (This could be waived for lower-income applicants).

Who is a Good Candidate for an Installment Plan?

First, you sincerely cannot pay the full lump sum.

(There's a difference between "cannot" and "don't want to" pay)!

Whether your tax debt was incurred in the most recent tax year, or you owe years and years of back taxes, even if you've had your wages garnished or the IRS has a tax lien on your property, or even if they've entered your bank account and withdrawn money, the installment plan could work for you and could immediately pause IRS collection actions.

Can You Do It Yourself?

Yes, you absolutely can...

But be very careful!

The IRS is quite picky about their forms being filled out perfectly.  Yes, you can do it on your own, but if you run into any questions along the way or want a second opinion, we recommend you contact our friends at Optima Tax Relief.  They've helped settle millions of dollars in tax debt.

Can You Qualify for Debt Forgiveness If You Owe $16k-$25k to the IRS?

The first thing most people who have over $16,000 in tax debt want to do is see if they can get the debt forgiven.

Often, their debt CAN be forgiven!

In fact, in 2018 alone, the IRS accepted 24,000 "Offers in Compromise" amounting to $261.3 million of forgiven debt.

An Offer in Compromise is an offer to settle with the IRS for less than the amount you owe them.

How much could you "Settle" for?

You've probably heard the radio commercials where Freddy owed the IRS $18,000 in back taxes, hadn't filed his taxes in 5 years, and the IRS had levied his bank account for 25% of his monthly income.  Then Hero Tax Relief company comes along and gets him up to date on Freddy's filings, gets the IRS out of his bank account, and settles his $18,000 tax debt for $100.

Is this common?

Yes and no.  This sort of result really does happen every day.  (See real examples below from people who owed $16k to $25k)

But in most cases, you won't settle for $100.

Following the math above, with $261.3 million forgiven divided by 24,000 cases, the average Offer in Compromise accepted is $10,886.

I understand that number doesn't mean much, since delinquent taxpayers submit offers for anywhere from hundreds to hundreds of thousands of dollars, but I'd still say this is a good number for you since it's significantly less any number between $16k to $25K.

Say for example, you settled a $20,000 for $10,000 and set up a payment plan off that.  That would cost half the monthly payments!  Not bad.

Examples of success:

I browsed through dozens of testimonials from tax relief companies to find these.  Of course there were dozens and dozens I found for a higher starting balance.  Here were a handful I found for $10k to $15k owed.

Initial Amount Owed

Resulting Amount Owed

See Testimonial

Tax Relief Company Used

Jonathan owed $23,340

$100

Crystal Owed $18,000

$500

Gary Owed $25,000

$0

Kevin Owed $24,000

$750

Tim Owed $22,200

Pending for $744

Josh Owed $25,000

$2300

Please be aware there's no magic to the starting amounts owed above.  Just because you owe $18,000 like Crystal, that doesn't mean you'll settle with the IRS for $500.  Nor does a couple of thousand dollars make a huge difference. The IRS won't see a $17,000 debt too differently than if you $19,000.  Each individual case is different.

Offer In Compromise (OIC) Requirements - Will You Qualify?

The Offer in Compromise sounds like a dream come true.

​​​The trick is qualifying.  Beware!  It may not be easy.

For the 24,000 offers the IRS accepted in 2018, the IRS received 59,000 offers.  In other words, they accepted about 41% of the offers.

Absent of special circumstances, the IRS will not accept an Offer in Compromise if they believe you can pay the debt in lump sum or by payment plan.

In each case, they'll consider your:

  • income
  • assets
  • debt
  • and more!

In order to qualify, you must offer the IRS an amount equal or greater to what the IRS calls "the reasonable collection potential." (RCP)

That's a complicated way of saying whatever they can squeak out of you based on your assets such as your home, cars, investments and savings, etc, you need to offer them at least that amount.

The good news?

If you've got little to no assets and/or very heavy debt, there's a good chance your offer will be accepted.  That's why it probably makes no sense to file for Bankruptcy to avoid tax debt.  (If you really can't pay it, you have a good chance of your debt being forgiven anyway!)

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IRS Writes Off Millions Yearly

See if you qualify for tax relief.  Get a free consultation with a tax relief expert to see if you qualify today.

It's quick, easy, and free.

Making an Offer On Your Own VS. Hiring a Tax Relief Company

In order to apply, you must fill out ​IRS Forms 656, Offer in Compromise, and 433-A, ​Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-B if you own a business.​​

But be careful doing this on your own!

Here's where you must have caution.

You can definitely file the forms on your own, but the forms are long and detailed and the IRS requires them to be filled out perfectly!

Offer in Compromise Mistakes:


Tax relief expert (and former IRS revenue officer) Jeffrey McNeal says when he processed offers, he saw tons of mistakes made on the forms, even when prepared by CPAs and enrolled agents!

If you mess up the forms, this could lead to rejection or time delays.

To ensure accuracy, you should consider professional help.

Say, for instance, you owe the IRS $22,000 or $23,000 and submit an Offer in Compromise...  

Other than needing to make sure all the math is right and all fields are filled out properly on Form 433, that's just the starting point.  

Only 41% of submissions get approved so it must be done perfectly to give you the best chances.  If it goes to appeal, you will not only need to fill out a form, but McNeal states that just about the only ones to win their appeals were people who backed up their claims with:

  • The Internal Revenue Code (IRC)
  • The Internal Revenue Manual (IRM)
  • Existing case law

Do you feel qualified to reference the above codes and manuals in your appeal for tax relief?

The Internal Revenue Code is a massive amount of IRS documentation made up of over 9,000 sections, while the Internal Revenue Manual is made up of 39 parts (also massive), and we know there are tens of thousands of cases in case law.

Knowing what applies and what doesn’t to an Offer in Compromise would be nearly impossible for a non-professional.

Why Consider Hiring a Tax Relief Company:

While it would be a dream come true for a tax relief company to help you wipe out your tax debt, there are other reasons to consider using them.  They also: 

  • provide guidance on audits
  • help set up payment agreements with the IRS
  • help get current on any unfilled tax returns 
  • some may be able to stop potential penalties such as wage garnishments

Most importantly, they pause the stress of dealing with the IRS - Typically any case submitted to the IRS takes months (or years) to review.  While waiting for their response, the IRS typically suspends any collection activities, and will often lift wage garnishments or even return money levied from your bank account, as is often the case with an Offer in Compromise submission.

Our #1 choice for tax debt relief is Optima Tax Relief.  Click here to set up a free consultation.

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No Money to Pay the IRS?

Get a free consultation with a tax relief expert to see if you qualify for the Fresh Start.

It's quick, easy, and free.

Alternative Ways to Pay the IRS

Don't jump into settling with IRS if you can find a cheaper, alternate way to pay them.  Have you considered the following:

  • borrow from a retirement account (401k or IRA)
  • borrow from your home equity (such as a HELOC)
  • get a personal loan

Here are the rules for borrowing from your 401k, and you'd need to speak to a mortgage broker to find out about taking out equity if you own a home.

For personal loans, we recommend you visit Lending Tree.  They could save you thousands in interest and fees, and help get you a low monthly payment to get the IRS off your back.

Conclusion - Seek Help!

There are many things in life you can do on your own, but we would not recommend tangling with the IRS or your State when it comes back taxes.  If you owe $16,000 to $25,000 in taxes, we recommend you visit Optima Tax Relief to get free advice about what to do with your tax problem, and see if they could be a good fit to help you find a successful tax resolution.  Good luck!

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