Tax season can be stressful—especially if you get hit with a bigger bill than expected.
If you can’t afford to pay your taxes in full, don’t ignore it—there are ways to reduce penalties, set up payment plans, and find relief.
It is essential to act quickly to avoid extra fees or legal trouble.
1. File Your Tax Return Anyway
Even if you can’t pay, you must still file your tax return by the deadline. Failing to file triggers even larger penalties, which can make your situation worse.
Why it matters: The IRS charges a penalty of 5% per month on unpaid taxes if you don’t file—up to 25% of your total bill.
By filing on time, you avoid the worst penalties and keep options open for relief programs.
2. Pay What You Can Now
Even if you can’t pay the full amount, pay as much as you can. The IRS charges interest on unpaid taxes, so reducing your balance now lowers future costs.
Why it matters: Interest on unpaid taxes accrues daily, making your debt grow faster the longer you wait. By paying down your balance as soon as possible, you can minimize the interest charges and reduce your financial burden.
When you are back on your feet, using a high-interest savings account could help set aside money for future tax obligations, ensuring you’re prepared when the next payment is due.
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3. Set Up an IRS Payment Plan
The IRS offers payment plans that let you pay off your tax bill over time. If you owe $50,000 or less, you can apply online in minutes and avoid IRS collection actions. This option can provide peace of mind by allowing you to manage your debt without fearing immediate financial repercussions.
Why it matters: A monthly installment agreement prevents garnished wages, tax liens, and levies. By setting up a payment plan, you can avoid the more severe consequences of unpaid taxes while working to pay off your balance.
Applying is easy—visit the IRS Online Payment Agreement Tool to start.
Pro Tip: Struggling with tax debt? A solid financial strategy can help prevent future tax burdens. If you have at least $100,000 in savings, SmartAsset offers a free service that matches you with a vetted financial advisor. Get expert guidance to manage your finances and avoid unexpected tax surprises.
4. Request a Temporary Delay
If you’re facing extreme financial hardship, the IRS may pause collection efforts until you’re able to recover.
Why it matters: You won’t have to make payments immediately, but interest still accrues on what you owe. While this can provide short-term relief, staying proactive in addressing your tax obligations is important to avoid additional interest and penalties.
This option works best for those temporarily unemployed or dealing with unexpected financial emergencies.
Pro Tip: If you have more than $20,000 in unsecured debt, getting professional help can ease the burden. National Debt Relief is a trusted source for free advice and assistance, helping you navigate your financial challenges.
5. Apply for an Offer in Compromise
The IRS offers an “Offer in Compromise” (OIC) program that allows some taxpayers to settle their tax debt for less than the full amount owed. This program is a valuable option for those facing extreme financial difficulty who cannot pay the full debt.
Why it matters: Not everyone qualifies, but if you do, it could drastically reduce your tax burden. If you meet the qualifications, this could be a game-changer in resolving your debt for a fraction of what you owe.
Before applying, you can check if you’re eligible through the IRS OIC Pre-Qualifier Tool.
6. Look Into a Short-Term Extension
If you need more time but don’t qualify for a long-term payment plan, the IRS may grant a short-term extension of up to 120 days.
Why it matters: This can give you time to gather funds without setting up an official installment agreement.
Interest still applies, but there are no setup fees. You can request a short-term extension through the IRS website or by calling them directly.
7. Consider a Personal Loan or Credit Option
If you can’t pay your tax bill outright, a personal loan could help. Some lenders offer quick approvals and flexible repayment terms that might be more manageable than IRS penalties.
Why it matters: The IRS charges interest and penalties that may be higher than some personal loan rates, so depending on your situation, a loan could cost less in the long run. Taking out a personal loan could help you avoid accumulating additional penalties while providing the breathing room you need to pay off your tax debt.
Pro Tip: Turn your dreams into reality by accessing the funds you need. Apply for a personal loan and get the funds you need fast—an affordable way to manage tax bills without the stress of mounting penalties.
8. Avoid Tax Scams and Shady “Debt Relief” Companies
Be cautious of tax relief companies that promise to eliminate your tax debt for a large upfront fee. Some of these can be scams that charge for services you can do yourself.
Why it matters: When companies take your money without delivering results, you can be left in even more financial trouble.
If you need help, use trusted options like the IRS, certified tax professionals, or non-profit financial advisors.
9. Earn Extra Income to Pay Off Your Tax Bill
Finding an extra income source—even temporarily—can help if you’re struggling to cover your tax bill. Side hustles, freelance gigs, and flexible online jobs can provide fast cash to reduce what you owe.
Why it matters: Bringing in extra income lets you pay off tax debt faster while avoiding costly IRS penalties and interest. The more you can pay toward your tax bill, the less you’ll end up owing in the long run.
Pro Tip: Earn up to $1000 per month doing simple tasks with KashKick—a quick and easy way to start earning extra income to put toward your tax debt.
10. Adjust Your Tax Withholding for Next Year
Here’s your expanded Pro Tip, naturally integrated into the copy:
If you owe a large tax bill this year, take steps now to avoid the same situation next year. Adjust your withholding to ensure enough is removed from your paycheck or set aside more money throughout the year.
Why it matters: Small adjustments can prevent another stressful tax bill next April. You can avoid the financial strain of a large lump sum payment by proactively managing your withholding.
Use the IRS Tax Withholding Estimator to determine the right amount to withhold from your paycheck or self-employment income. This tool can help you set aside the right amount each month to prevent surprises at tax time.
Stay Ahead of Next Year’s Taxes
Owing taxes you can’t afford is stressful, but you have options. The key is to act quickly—filing on time, setting up a payment plan, and exploring relief programs can keep you in good standing with the IRS.
Taking proactive steps now can save you money in penalties and interest, and help you avoid the same situation next year.
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