Can’t Pay Your Taxes? Here Are 5 Options

Millions of us complete our taxes each year only to find that we owe Uncle Sam a few bucks — or a lot more.

This situation can turn scary if you don’t have the funds to write a check to the government. Even if this is the case, the IRS urges you to file anyway. As the agency states, failing to file typically will cost you more in penalties than failing to pay.

The IRS goes on to say:

“You should file your tax return on time each year, even if you’re not able to pay all the taxes you owe by the due date. You can reduce additional interest and penalties by paying as much as you can with your tax return. You should explore other payment options such as getting a loan or making an installment agreement to make payments. The IRS will work with you.”

This year, you have a little extra time to come up with the cash. Due to the coronavirus pandemic, the federal income tax deadline has been extended to July 15. But the extended deadline still may not be enough for some folks.

If you can’t pay, following are some options.

Get a loan

If you need funds quickly, a good solution is an interest-free loan from friends, family or maybe your boss. A personal loan might be another good option. Visit the Money Talks News Solutions Center for more information about a personal loan.

For more on loan options, check out “Now Is the Time to Get a Loan to Fit Your Life.”

Charge it

You could put what you owe on a credit card or debit card, but it will cost you. Federal payment processors charge upfront fees, plus your card issuer will charge you interest on your balance.

Visit the IRS website for more on this option.

Buy time

If by Tax Day you ask for an automatic extension of time to file your income tax return, remember that getting the extra time will only help in a limited way. As the IRS reminds you:

“An extension of time to file is not an extension of time to pay.”

However, you will avoid the late-filing penalty, the agency says. Additionally, IRS Form 4868, which is the extension request that can be filled out online or on paper and mailed, says that a late payment penalty will not be charged if you can show “reasonable cause for not paying on time.” According to the IRS:

“You’re considered to have reasonable cause for the period covered by this automatic extension if both of the following requirements have been met.

  1. At least 90% of the total tax on your 2019 return is paid on or before the regular due date of your return through withholding, estimated tax payments, or payments made with Form 4868.
  2. The remaining balance is paid with your return.”

Make a deal

The IRS may be nicer than you think. In fact, the agency might work out a payment plan with you if you are enduring financial hardship. According to the agency:

“You should request a payment plan if you believe you will be able to pay your taxes in full within the extended time frame. If you qualify for a short-term payment plan you will not be liable for a user fee.”

For more on this option, check out the IRS website.

‘Offer in compromise’

You may qualify to settle your tax liability for less than the amount you owe, says the IRS. The agency considers your ability to pay, income, expenses and asset equity. The agency says:

“We generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time.”

Check your eligibility with the IRS’ Offer in Compromise prequalification tool.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
13 Small Gadgets Under $20 That Make Life Better
13 Small Gadgets Under $20 That Make Life Better

These inexpensive electronics will make your day-to-day life a little easier — and happier.

7 Secret Perks of Individual Retirement Accounts
7 Secret Perks of Individual Retirement Accounts

IRAs come with bells and whistles that many other accounts lack — including some perks you may not know exist.

The 5 Worst Home Upgrades for the Money
The 5 Worst Home Upgrades for the Money

These home improvement projects basically never pay off.

10 Mistakes That Cost You Money at Warehouse Stores
10 Mistakes That Cost You Money at Warehouse Stores

Wholesale clubs might have great deals, but these mistakes will cost you.

12 Ways to Never Pay Full Price for Anything
12 Ways to Never Pay Full Price for Anything

Stop paying retail prices. Here are plenty of ways around that.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

How to Buy Gas At Costco Without a Membership
How to Buy Gas At Costco Without a Membership

The warehouse club often has some of the cheapest gas in town. Here’s how you can get it as a nonmember.

10 Things to Stop Buying If You Want a Clutter-Free Home
10 Things to Stop Buying If You Want a Clutter-Free Home

If you like to keep things simple, avoid these purchases.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Vacuums from this brand can last a half-century, if not longer — and they’re hot on the resale market.

A Simple Way to Silence Robocalls Today
A Simple Way to Silence Robocalls Today

A few steps can keep your phone from ringing when a spammer calls.

This Company Makes the Best Tires in America
This Company Makes the Best Tires in America

Driver satisfaction with tires is at an all-time high, but one brand stands out.

This Health Issue Can Hint at Dementia Years in Advance
This Health Issue Can Hint at Dementia Years in Advance

One type of pain is especially associated with cognitive decline.

Can I Switch to Spousal Social Security Benefits When My Ex Dies?
Can I Switch to Spousal Social Security Benefits When My Ex Dies?

Knowing when to claim can help you maximize benefits.

Medicare Will Not Cover These 6 Medical Costs
Medicare Will Not Cover These 6 Medical Costs

Don’t let these health care expenses catch you off guard in retirement.

8 Things You Should Always Buy on Amazon
8 Things You Should Always Buy on Amazon

The giant retailer shines when it comes to these things, from basics to hard-to-find specialty goods.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

This iconic dinnerware is prized for everyday use as well as reselling for profit.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

Beware This Hidden Ingredient in Rotisserie Chicken
Beware This Hidden Ingredient in Rotisserie Chicken

Something foul may lurk in those delicious, ready-to-eat birds.

5 Ways to Fill Your Pantry With Free Food
5 Ways to Fill Your Pantry With Free Food

Anyone can take advantage of these resources.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

5 States With the Worst Health Care for Retirees
5 States With the Worst Health Care for Retirees

All of these states are located in the same region of the nation.

6 Reasons You Should Stop Hiding Cash at Home
6 Reasons You Should Stop Hiding Cash at Home

Stashing money around the house is anything but harmless.

12 Deep Discounts Available on Amazon This Friday
12 Deep Discounts Available on Amazon This Friday

These items are steeply discounted — but the deals won’t last long.

5 Products You Should Never Buy Generic
5 Products You Should Never Buy Generic

Sometimes the brand-name version is clearly superior.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.