Owing the IRS money you don’t have is stressful, but the IRS has set programs for this, and most people qualify for at least one. The worst move is to skip filing because you can’t pay. That choice adds a second, bigger penalty on top of the first.
This guide covers what to do if you can’t pay your taxes, using information from the IRS.
File on time, even if you can’t pay
The IRS charges two separate penalties:
- Failure to file: 5% of the unpaid tax for each month or part of a month your return is late, up to 25%.
- Failure to pay: 0.5% of the unpaid tax for each month or part of a month it stays unpaid, up to 25%.
The penalty for not filing is 10 times larger per month than the penalty for not paying. Filing on time, even with a zero payment, stops the bigger one.
There’s also a minimum penalty if your return is more than 60 days late. For returns due after December 31, 2025, the IRS sets it at $525 or 100% of the tax you owe, whichever is less.
Interest also builds on unpaid tax, and on penalties, until you pay in full.
If you need more time to finish your return, you can file for an extension. An extension gives you more time to file, not to pay. Pay what you can by the April deadline to cut interest and penalties.
Pay what you can now
Any amount you pay now lowers the balance that interest and penalties apply to. You can pay through your IRS online account, IRS Direct Pay, or a debit or credit card. Card processors charge a fee, and a credit card may carry higher interest than the IRS does, so compare before you use one.
Option 1: Short-term payment plan
If you can pay in full within 180 days, you can ask for a short-term payment plan:
- You must owe less than $100,000 in combined tax, penalties, and interest.
- There’s no setup fee.
- Interest and penalties continue until you pay in full.
Option 2: Long-term payment plan (installment agreement)
If you need more than 180 days, you can set up monthly payments. You can apply online if you owe $50,000 or less in combined tax, penalties, and interest, and you’ve filed all required returns.
Setup fees depend on how you apply and how you pay:
- Online, with automatic payments from your bank: $29
- Online, other payment methods: $69
- By phone, mail, or in person, with automatic payments: $107
- By phone, mail, or in person, other payment methods: $178
Low-income applicants may qualify for lower fees. The IRS waives the fee for low-income taxpayers who pay by direct debit, and charges $43 for other low-income plans, which you may get back once you complete the plan. The IRS defines low income as at or below 250% of the federal poverty guidelines.
Interest and the failure-to-pay penalty continue while you’re on a plan. Automatic payments help you avoid a missed payment, which could put the plan in default.
If you owe more than $50,000, you can still ask for a plan by phone or mail, and the IRS may ask for financial information.
Option 3: Temporary delay of collection
If paying anything would keep you from covering basic living expenses, you can ask the IRS to mark your account as currently not collectible. The IRS pauses collection until your finances improve. Your debt doesn’t go away, and interest and penalties keep adding up. The IRS may review your income later.
Option 4: Offer in compromise
An offer in compromise lets some taxpayers settle for less than the full amount. The IRS looks at your income, expenses, assets, and ability to pay. It’s meant for people who can’t pay the full amount through a payment plan.
Use the IRS Offer in Compromise Pre-Qualifier tool to see if you might qualify before you apply. There’s an application fee, and low-income applicants may qualify for a waiver.
Be careful with companies that advertise settling your tax debt “for pennies on the dollar.” You can apply for an offer in compromise yourself.
Ask for penalty relief
The IRS may remove some penalties. Two common types:
- First-time abatement: If you have a clean record for the past three years, you may qualify to have a failure-to-file, failure-to-pay, or failure-to-deposit penalty removed.
- Reasonable cause: If something outside your control kept you from filing or paying, such as a serious illness, a disaster, or being unable to get records, you can ask for relief.
You can ask by calling the number on your IRS notice, or by filing Form 843. Interest on the tax itself usually can’t be removed, but interest on a removed penalty goes away with it.
Watch for scams
The IRS usually contacts you by mail first. It won’t:
- Call to demand immediate payment by gift card, wire transfer, or crypto
- Threaten to have you arrested
- Ask for a credit card number over the phone
If you’re not sure a notice is real, log into your IRS online account or call the IRS at the number on IRS.gov. Our guide on avoiding financial scams lists other warning signs.
To protect future refunds from identity thieves, see our identity theft recovery guide, which explains the IRS Identity Protection PIN.
Free help
- Taxpayer Advocate Service: An independent office inside the IRS that helps if you face financial hardship or can’t resolve a problem through normal channels. Visit taxpayeradvocate.irs.gov.
- Low Income Taxpayer Clinics: Offer free or low-cost help with IRS disputes for people who qualify.
- VITA and TCE: Free tax preparation for people who qualify.
Quick checklist
- File your return on time, even if you can’t pay
- Pay whatever you can now
- Apply for a short-term or long-term plan online
- Use automatic payments to keep the plan in good standing
- Ask about penalty relief if you have a clean record or a good reason
If other bills are piling up too, see what to do when you can’t pay your bills.
