If you file your your tax return and discover you have a tax bill this year, you're not alone. While the IRS returns billions of dollars to taxpayers each year, some Americans do end up having to pay.Â
If you can't pay your tax bill you can take these steps to avoid facing a hefty penalty from the IRS.
1. File anyway
Your tax bill is due on April 15 this year -- regardless of whether you file on time or file an extension. Not filing your taxes won't make your tax bill go away. Â
If you don't pay or set up a payment plan, you'll rack up hefty penalties and fees, causing you to owe more than you originally did. The IRS late payment penalty is 0.5% of the tax owed for each month or part of a month the tax bill remains unpaid after the due date, up to 25%.
The government can also garnish your wages or take the money straight from your bank account. You could even face getting a tax lien on your property, which could force you out of your home.
2. Contact the IRS
As soon as you know you won't be able to afford your tax bill, call the IRS at 800-829-1040. Depending on your situation, you could be eligible for an extension to pay or another agreement.Â
If you have the means, pay as much as you can to lower your balance and payments. This shows the IRS that you intend on paying your tax bill, rather than just ignoring it.
3. Ask for an extension
If you need more time to gather the funds to pay your tax bill, the IRS might agree to a short-term extension on your bill without penalty (up to 120 days).
But keep in mind if you don't pay by the new deadline, you could incur outstanding fees and charges. It's a good idea to avoid a payment plan if you can because those include an installment fee.
4. Get on a payment plan
An installment plan allows you to pay the government a set amount per month depending on when you get paid and how much you can afford. You'll make ongoing payments until your tax bill is paid in full.
There are different payment plans available, depending on your financial situation. You'll need to complete IRS Form 9465, which is an Installment Agreement Request. This form lets you request a monthly installment plan from the IRS. You're guaranteed to get an installment agreement if you're current on your taxes, you owe less than $10,000 and you agree to repay your bill within three years.Â
5. Request an Offer in Compromise
An Offer in Compromise (OIC) is settling with the IRS on an amount less than what you originally owed. If you have no way of paying your full debt and you have no assets, or if paying your tax bill would cause financial ruin to your everyday living expenses -- such as missing a rent payment, for example -- an OIC is a good option.
You can submit an application but there's no guarantee the IRS will approve it. You'll be evaluated and verified by the IRS to see if you're eligible for an OIC. There's a $205 application fee, although low-income Americans can qualify for a waiver.Â
If you qualify and are approved for an Offer in Compromise, you can pay either in one lump sum or in monthly payments. While the IRS is evaluating your eligibility, you're still required to make monthly payments to avoid being denied.
A few more things to think about
Remember, your situation isn't unusual. Talk to the IRS about your options if you're not sure you'll be able to pay your bill in full on Tax Day.
You also may want to update your W-4 form at your job to ensure enough taxes are being withheld. Ask your human resources contact if they'll go over your selections. Separately, if you have a side hustle, you might have a bigger tax bill because of that.
Don't be afraid to talk to a qualified tax professional about your situation to avoid it next year. Getting professional help could make the difference between owing money and getting a refund in 2026.
