Paying IRS vs state taxes in full

BubsMama · #1 (**permalink**) 03-30-2014, 04:01 PM

Hi all,
I owe a significant amount to the IRS and a reasonable one to state (Va). My question is: should I pay state in full and IRS a smaller "initial payment" (of course will be setting up an installment agreement), or pay a small "initial payment" to state and set up payments, then a larger "initial payment" to IRS w/ payments? The interest for state is (I think) a flat 6% monthly vs whatever the IRS's interest are. I have filed so their shouldn't be any late penalties.
I'm just not sure which option is better: paying state off or splitting the "initial payment" and having payment plans for both.
Thanks for any input

Wnhough · #2 (**permalink**) 03-31-2014, 01:14 AM

Quote:

Originally Posted by BubsMama

Hi all,
I owe a significant amount to the IRS and a reasonable one to state (Va). My question is: should I pay state in full and IRS a smaller "initial payment" (of course will be setting up an installment agreement), or pay a small "initial payment" to state and set up payments, then a larger "initial payment" to IRS w/ payments? The interest for state is (I think) a flat 6% monthly vs whatever the IRS's interest are. I have filed so their shouldn't be any late penalties.
I'm just not sure which option is better: paying state off or splitting the "initial payment" and having payment plans for both.
Thanks for any input

I guess it depends on installment agreement with the Internal Revenue Service and your state dept of rev