For many taxpayers, filing season is stressful enough — but what if you complete your return and discover you owe more than you can afford to pay right now? Do not panic. The IRS and most states have programs to help you manage your tax bill without falling into deeper trouble. Here are practical steps you can take if you cannot pay your income tax bill in full.
1. File Your Return On Time Anyway
Even if you cannot pay, always file by the deadline.
- Filing late adds extra penalties on top of what you already owe.
- Filing on time reduces penalties to just the “failure to pay” fee and interest.
Filing first and arranging payment second is the best way to limit extra costs.
2. Pay What You Can Up Front
Partial payments lower your balance and reduce future interest.
- Even a few hundred dollars toward your balance shows good faith.
- You can pay online using IRS Direct Pay (bank transfer) or an approved debit/credit card processor.
3. Apply for an Installment Agreement
The IRS lets most taxpayers set up monthly payment plans.
- If you owe less than $50,000, you can usually apply online in minutes.
- Plans can stretch up to 72 months (six years).
- Interest still accrues, but penalties are lower once you are in a plan.
Apply here: IRS Online Payment Agreement
4. Request a Short-Term Extension
If you can pay within 120 days, the IRS may grant a short-term payment plan without a formal installment setup.
- Still interest-bearing, but simpler to manage.
- Useful if you expect money soon, such as a bonus, business payment, or other income.
5. Explore Hardship or “Currently Not Collectible” Status
If paying would cause extreme financial hardship:
- You may qualify for “Currently Not Collectible” (CNC) status.
- The IRS pauses collections until your finances improve.
- You still owe the balance and interest, but it buys time and relief from enforcement.
6. Consider Professional Help
Sometimes back taxes involve penalties, old debts, or complex finances. A licensed tax professional (CPA, Enrolled Agent, or tax attorney) can:
- Negotiate on your behalf.
- Apply for penalty abatements.
- Help with an Offer in Compromise (settling for less than the full amount in limited cases).
7. Do Not Ignore the Bill
Ignoring tax bills can lead to:
- Extra penalties and fees.
- Liens on property.
- Wage garnishments or bank levies.
Taking any step — even a partial payment or applying for a plan — keeps you in better standing.
Key Takeaway
You do not need all the money today. The IRS and state tax agencies provide multiple paths to help you pay your income tax bill over time. The worst option is doing nothing. File on time, pay what you can, and use the tools available to protect your finances.