• Danielle Dryden, Esq.

What To Do If You Can’t Pay Your Taxes


Worried Woman

As the deadline to file your tax return approaches (April 18), I’ve gotten a number of questions about what to do if you can’t afford to pay what you owe.


Don’t worry! You do have options.

Before moving on, I want to mention a couple of important things.

  1. Make sure you still file your return on time or file an extension. Just remember that an extension is only an extension to file and not an extension to pay. Often times, people decide to hold back filing until they can afford to pay the balance, but this is probably the worst choice you could make. You’ll have a Failure to File penalty added on top of the Failure to Pay penalty, not to mention additional interest.

  2. Pay as you can afford with your return or your extension. This will help minimize the penalties and interest added to your balance.

With that out of the way, let’s talk about your options. The IRS offers a couple of different installment agreements. They vary mostly in terms of length of time to pay but also in the amount of the “user” fee charged to get the agreement set up.


Form 9465, Installment Agreement Request


The easiest way to get an agreement in place is to fill out and submit Form 9465 with your tax return or send it to the IRS by mail, though I wouldn’t recommend the latter. If you’ve already filed your return, you can use the Online Payment Agreement tool to set up several different kinds of agreements online. You can also call the IRS directly and set up an agreement with a representative, but this option usually has the highest user fee.

Short-Term Payment Plan


A short-term payment plan is a plan to pay in 180 days or less. You can set it up to make manual payments each month but I always recommend you set up your agreement using Direct Debit. This will make it less likely you miss a payment and risk default. If you set up this kind of agreement online, you’ll be limited to 120 days versus setting up with a representative over the phone will give you up to 180. There is no user fee for this kind of agreement no matter how you go about setting it up.


Long-term Payment Plan


A long-term payment plan gives you 72 months or more to pay. Your balance due will determine the number of months allowed. Setting up online as a Direct Debit will add a $31 user fee while setting up by phone, or mail will be $107. Setting up online to make manual monthly payments will be a $130 user fee and $225 by phone or mail. If you qualify as a “low income” taxpayer, the fee can be reduced to $43. (These fees are current as of April 2022.)

File Your Return and Request an Installment Agreement


So, if you have a balance that you can’t pay in full, all is not lost. Get your return filed on time, pay as much as you can, and then request an installment agreement that works for you to pay off the rest. You will have some penalties and interest, but paying a little extra in a formal agreement is always better than ignoring the problem and doing nothing at all.

As always, I’m here to help. Feel free to head over to the booking page to schedule a consult if you need more direction.


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Nearly every taxpayer that contacts me for help asks me some version of this question: Can you help me settle my debt for less with the IRS?