What to Do if I Owe Taxes but Can’t Pay Them

If you owe taxes and can’t pay them, don’t panic. File your taxes by the deadline and learn about your options. The important thing is to pay what you can and make a plan.

File your tax return by the deadline

You should still file your tax return by the deadline (usually April 15) and try to pay as much as you can to avoid penalties and interest. If you don’t file your taxes by the deadline, you will be charged a fine each month you are late, up to 5 months. You will also be charged a penalty for not paying your taxes by April 15 or sending a check that bounces.

Make sure the amount is accurate

Make sure you are required to pay the amount. If you’ve received an IRS notice and don’t think you owe that amount, call the number on the notice to discuss it.

Figure what you can afford to pay

Think about your current and future financial situations and make a list of your monthly expenses, debts you owe, and how much you make. From there, determine how much you can afford to pay. If you choose to start a payment plan, make sure you can maintain those payments on time.

You may also consider different ways you can raise money, including borrowing from family and friends or taking out a loan. Interest rates and fees charged by a bank may be lower than what the IRS charges.

Consider using a payment plan

The options below are from the IRS. Note that unless you pay the amount owed in full, you will be charged interest and penalties.

Keep in mind that it’s important to respond to an IRS notice. The IRS has the right to take collection actions if you don’t pay your taxes. Learn more about the IRS collection process.

Financial Situation Payment Options Fees, Penalties, or Interest
If you can pay the full amount You have several options for paying the amount in full:

Service fee for credit or debit card

No interest or penalties

Financial institutions may charge a fee for EFW

Cash payments are charged a $3.99 fee per payment

If you can pay the full amount within 120 days or less Request a 120-day extension one of the following ways:

No service fees

Penalties and interest will accrue until the owed amount is paid in full

If you need more than 120 days to pay the full amount There are a couple different ways to set-up a long-term payment plan.

Through automatic withdrawals using the Direct Debit Installment Agreement

Apply online: $31 set-up fee

Apply by phone, mail, or in-person: $107 set-up fee

Low income: $31 fee waived

Penalties and interest will accrue until the owed amount is paid in full

Pay amount without automatic withdrawals using Direct Pay, debit/credit card (service fees involved), check or money order. Apply online: $149 set-up fee (low income: $43 fee set-up fee, which may be waived if you meet the requirements)

Apply by phone, mail, or in-person: $225 set-up fee (low income: $43 set-up fee may be waived if you meet the requirements)

Penalties and interest will accrue until the owed amount is paid in full

Service fee for credit/debit card

If you won’t be able to pay off the full amount An Offer in Compromise (OIC) is an agreement between you and the IRS that reduces your tax liability if you can’t afford to pay. Check your OIC eligibility. $186 application fee and initial payment. If you meet Low Income Certification guidelines, you don’t need to send the fee or initial payment

Penalties and interest will accrue during consideration of application

If you can’t make any payments If paying taxes owed would prevent you from meeting basic living expenses, you can request to Temporarily Delay the Collection Process by reporting your account currently not collectible. You will still owe the amount. Call the IRS for assistance at 800-829-1040 or call the number on your bill or notice. Penalties and interest will accrue until the owed amount is paid in full


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