What to Do If You Can’t Afford to Pay Your Taxes
Mar 09, 2023
Filing your taxes can be stressful, especially if you anticipate owing money but aren’t sure if you can cover the cost. Fortunately, you have options like short- and long-term payment plans.
But the most important thing…
File Your Taxes Regardless
Even if you’re not sure how to pay, don’t ignore the April 18, 2023, deadline. By not filing your taxes on time, you’ll end up owing more in penalties and interest. Those who don’t file by the deadline are subject to a failure-to-file penalty.
Note: Some taxpayers, such as disaster victims, military service members, eligible employees working in combat zones, and people living overseas may have additional time to file and pay their taxes.
If you do not fall into one of these special categories and need more time to get your documentation in order, you can file for an extension using Form 4868, which gives you until October 16, 2023, to file your taxes. However, even if you file an extension, you’re still required to pay the amount owed by the normal April deadline.
So, what can you do?
Pay What You Can
If you can’t afford the entire amount, pay as much as you can by April 18, 2023. You may still be subject to penalties and interest, but they won’t be as steep.
Apply for a Payment Plan
To pay your tax bill over time, you must qualify and be approved for a payment plan. The IRS offers two types of online plans:
- Short-term payment plan: If you owe less than $100,000 in taxes, penalties, and interest combined, you can apply to pay them off in 180 days or less. There is no setup fee required.
- Long-term payment plan: If you owe less than $50,000 in taxes, penalties, and interest combined, you can apply to pay in monthly installments over a longer period. A setup fee may apply.
In both plans, you will accrue interest until the amount is paid in full. You may also be subject to penalties, depending on your situation. To apply for one of these plans, visit the IRS website.
If you do not qualify for one of these plans but need an option to pay your taxes over time, you can submit a request for an installment plan using Form 9465. The process is similar, but the setup fee will be higher than the online long-term plan.
Ask for Help
If you’re worried about how to pay for your taxes, you may not want to incur an additional expense. However, our tax professionals can help you maximize your return and navigate the payment process, which may save you money down the line. Don’t hesitate to schedule an appointment with us to see how we can help.
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