What Happens If You Can't Pay Your Taxes At All?
If you can't pay your taxes at all, the IRS offers several options for repayment.
1. Apply For A Monthly Installment Plan
The most appealing option for those behind on their taxes but confident that they can catch up in an IRS payment agreement. After filing your tax return, apply for a payment agreement online.
To mail in your taxes, simply include Form 9465 with your payment. Doing so allows you to qualify for a monthly installment plan from the IRS, which gives you up to 72 months to pay what you owe—as long as it doesn't exceed $50,000 when combined with penalties and interest.
Hopefully, you haven't neglected to file your taxes in previous years. The IRS will only allow you to get on an installment payment agreement if you're up-to-date on filing past returns.
2. Request An Offer in Compromise
If you're struggling to come up with the full amount of taxes you owe, the IRS recommends this method. Briefly, you make a proposal to the IRS for what you can pay based on your circumstances. If they agree to it, that's the amount you'll pay altogether.
To qualify for an Offer in Compromise, you must demonstrate that:
• You can't pay your full tax debt.
• Paying it all would cause financial hardship.
• The amount offered is equal to or more than what the IRS believes can reasonably be collected.
3. Request A Temporary Delay
If you're completely unable to make your tax payments, the IRS may grant you temporary relief by approving a delay in collection action. This option is only available if:
• You can prove that paying your taxes would cause undue economic hardship.
• You've filed all of your required returns and submitted any necessary documentation.
• You're making a good-faith effort to pay your taxes when you can.
No matter what method you choose, the key is to take action as soon as possible. The longer you wait, the more it will cost you—the IRS has the right to charge interest and penalties on any unpaid taxes. If left unpaid, the amount can quickly increase and become increasingly difficult to manage. Take control of your taxes now and make sure you don't fall behind again in the future.