How to Pay the IRS if You Owe Taxes

If you are worried about how to pay the IRS because you owe taxes, you are not alone. Fears of an impending recession and a high cost of living in the current economy can make paying the IRS feel like an impossible task. On top of that, in a recent tax season survey (opens in new tab), nearly 30% of people who responded said that they would be unable to pay their tax debt by Tax Day (April 18). 

The good news is that if you can't pay your taxes in full, the IRS offers payment plans that might make things easier for you. But those plans might not be the best choice for everyone. 

How to Pay the IRS: Pay Taxes in Full

If you can pay your tax bill in full by the tax deadline, you probably should. Paying your taxes in full and by the due date saves you money. You won’t incur setup fees, accrue interest, or face financial penalties. If you miss the tax deadline, you should still pay your taxes as soon as possible.

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The IRS provides several ways for taxpayers to make payments on their tax accounts. 

• Pay with direct pay (requires identity verification)  
• Pay through your online IRS account
• Schedule a payment when you e-file
• Mail a check or money order
• Pay with cash at an IRS Taxpayer Assistance Center (requires an appointment)
• Pay with cash at a participating retailer (up to $1,000)

Pay the IRS: Online Payment Plans 

If you can’t make your full tax payment by April 18, you might qualify for an IRS online payment plan (opens in new tab). 

Short-Term Payment Plan. For example, the IRS offers short-term-payment plans that allow you to pay what you owe over a period of 180 days or less. 

• However, you will still face penalties and interest until you have paid your tax bill in full, so over time, the payment plan will cost you more than if you pay by the Tax Day deadline (April 18).
• To qualify for a short-term plan with the IRS, you must owe less than $100,000 between your tax bill, penalties, and interest.
• There is no setup fee for this plan.

Long-Term Payment Plan. You might still qualify for an IRS online payment plan if you need more than 180 days to pay off your tax debt. Individuals who have already filed all their required tax returns can apply for a long-term payment plan when they owe no more than $50,000 total between taxes, interest, and penalties. 

As with the short-term payment plan, your tax bill will continue accruing interest and penalties until the full amount is satisfied. You will make monthly payments until you have paid the bill in full.

• When you owe more than $25,000, the IRS requires you to make payments through automatic withdrawals. This option comes with a $31 setup fee, but taxpayers with low income can have this fee waived.
• When you owe $25,000 or less in total taxes, penalties, and interest, the IRS allows you to make payments without having to enroll in automatic withdrawals. This payment arrangement requires a higher setup fee of $130, but that amount drops to $43 for workers with low income. In some cases, the IRS can reimburse this initial cost. If you are a taxpayer with low income, and the online system does not waive the setup fee, you can fill out Form 13844 (opens in new tab) to request a fee reimbursement.

Revise an Existing IRS Installment Plan 

If you already have a payment plan with the IRS, you can sometimes make changes to that plan online to add new tax debt. While you can alter the monthly payment amount, you must pay at least the set minimum amount or the system will prompt you to fill out Form 9465 (opens in new tab) and Form 433-F (opens in new tab). 

Revising an existing IRS payment plan requires a $10 revision fee, but some taxpayers can have this cost waived. (The IRS will automatically waive this fee if the system recognizes you as a taxpayer with income at or below 250% of the federal poverty level).

Guaranteed Installment Agreement 

Some individual taxpayers might qualify for a guaranteed payment agreement. To qualify for this agreement, you must owe $10,000 or less and agree to pay in full within 3 years. You also must have filed required tax returns for the past 5 years and not owe tax from prior years. However, taxpayers who have already entered into a payment agreement with the IRS are not eligible for a guaranteed installment plan.

Other Tips for Paying Your Tax Bill 

If you cannot pay your taxes in full before the tax deadline and you don't want to enter into a payment agreement with the IRS, there are some other things you might consider as you try to ease tax debt stress.

• Don't file your federal tax return late. File your federal tax return by the tax deadline or file for a tax extension. That way, you avoid a failure-to-file penalty, which would unfortunately increase your tax burden if you already owe. In some cases, if there's a good reason why you can't pay your taxes on time, you may be able to get penalty relief from the IRS. But there are restrictions on what counts as a "good reason," so this is not as easy as it might seem.
• File as soon as possible if you already missed the tax deadline. The failure-to file penalty is 5% of your taxes due for every month (or partial month) your return is late, so filing as soon as possible can prevent you from paying even more.
• See if you are eligible for an Offer in Compromise with the IRS. Some taxpayers can make an offer to the IRS to settle their tax debt for less. (This is known as an offer in compromise agreement). Not everyone is eligible for this type of agreement, however. The agency has a tool on its website (opens in new tab) that can help you determine if you might be eligible to settle with the IRS for less than you owe.
• Consider whether you have other legitimate ways to pay the IRS. For example, some people opt to borrow from family or good friends or take out personal loans to pay their tax bills. Of course, there are always pros and cons to borrowing money, so it's important to assess all of your options.

What Happens if You Don't Pay Your Taxes?

Remember: If you don't pay your taxes on time, the IRS will impose a penalty. The dollar amount of this penalty is based on the taxes owed and how long they remain unpaid. You will be charged a 0.5% penalty for each month (or partial month) until you have satisfied your bill, up to 25% of your total unpaid taxes. So, while figuring out how to pay the IRS when you owe taxes can feel frustrating, it’s best to take action as soon as possible. 

In addition to the penalties mentioned, failing to pay or to make an agreement with the IRS to pay your taxes over time can sometimes lead to more severe consequences, such as a federal tax lien on your property. The IRS could also possibly seize certain assets, or garnish your wages. If you're worried that you can't pay on time and/or if you haven't yet filed your 2022 federal tax return, you may want to consult a qualified tax preparer.