Owe Taxes? You've Got Payment Options

It’s a sinking feeling—finishing your tax return only to realize you owe more than you expected. If you’re not in a position to pay it all right now, take a deep breath. You're not alone, and more importantly, the IRS actually does have tax payment options.

Here’s what you can do if you owe taxes but can’t pay them in full today:

1. File on Time Anyway

First things first: don’t skip filing your return just because you can’t pay the bill. The penalty for not filing is much higher than the penalty for not paying. Even if you’re only sending in a partial payment, filing on time helps reduce the extra costs.

If you can’t file by the deadline, request an extension—but remember, that only gives you more time to file, not to pay.

2. Pay What You Can Now

Even if you can’t cover the full amount, paying something now will reduce the penalties and interest you’ll owe. The IRS charges interest on unpaid balances, and there’s also a monthly penalty, so the faster you chip away at it, the better.

A partial payment also shows good faith if you apply for a payment plan later.

3. Set Up a Payment Plan with the IRS

The IRS offers payment plans that are surprisingly straightforward to set up:

• Short-Term Payment Plan (120 days or less): No setup fee. You can apply online, by phone, or through your tax pro.

• Long-Term Payment Plan (more than 120 days): This is an installment agreement. There’s a setup fee, but it can be reduced or waived based on your income.

As long as you make your payments on time, the IRS generally won’t take further collection action.

4. Consider Other Tax Payment Options (With Caution)

Some people consider paying their tax bill with a credit card or taking out a personal loan. These might make sense if the interest rate is lower than IRS penalties, but be careful—credit card fees and interest can pile up fast.

It’s usually better to go with the IRS payment plan unless you’re confident in your ability to pay it off quickly through other means.

5. Communicate if You're in Serious Financial Trouble

If you’re going through financial hardship—like being unemployed, facing eviction, or dealing with major medical issues—you may qualify for "Currently Not Collectible" status. That puts IRS collections on pause, at least temporarily.

There’s also a program called an Offer in Compromise, where you may be able to settle your debt for less than what you owe. It’s not easy to qualify, but for some, it’s worth exploring.

Bottom Line: You Have Options

Owing taxes you can’t pay feels overwhelming, but ignoring it won’t make it go away. The good news is, the IRS would rather work with you than against you. Filing on time, making partial payments, and setting up a plan can help you avoid the worst penalties—and give you some breathing room.

Need help figuring out the best option for your situation? Reach out—I’m happy to walk through it with you.

The information provided in this blog is for general informational purposes only and is not intended to be comprehensive or serve as professional advice. Every business and financial situation is unique. I encourage you to consult with a qualified professional to address your specific needs and circumstances.