I am seeking an IRS settlement. How do I calculate my payments?

If you are seeking an IRS settlement and you want to calculate your payments in advance to determine how much you will owe, there is a simple method to do so.  The Internal Revenue Service is the hardest creditor to avoid, and even with IRS settlements, they will always want the full amount of the tax to be paid as part of the settlement- that means you should start with this number when calculating your payments. The next key is going to be how long you have to repay the taxes owed.  There are generally default settlement periods available from three to five years.  Thus, in order to determine how much your payments will be, you should take the amount of tax that you owe and divide it out across the number of months that the settlement is going to be offered to you for. 

As part of IRS tax settlements, the IRS will often agree to remove penalties and fees in exchange for a structured monthly payment that satisfies the entire amount of the back taxes that are due. Your specific situation will best be discussed with the IRS office or employee who is handling your tax settlement and who is giving you the terms of the settlement.  As mentioned above, rough calculations can give you an idea of the settlement amount, but without knowing how much of the penalty and fee amount is being settled, or the terms of the settlement in years, it is impossible to calculate exactly. 

Another important thing to note is that sometimes a tax attorney can assist you in negotiating a better settlement with the IRS than you would on your own. Thus, before settling your tax debt, it is in your best interests to speak with a lawyer.