What if I can't afford to pay my tax liability?
Interest will accrue on your liability, but there are options
If you can't pay your full tax bill, the IRS offers payment plans. File your return on time either way: the penalty for filing late is much steeper than the penalty for paying late.
If you're an individual
You can pay in full within 180 days. A short-term payment plan gives you up to 180 days to clear the balance. You can apply online if you owe less than $100,000 in combined tax, penalties, and interest. There's no setup fee.
You need longer than 180 days. A long-term payment plan, also called an installment agreement, lets you pay monthly. You can apply online if you owe $50,000 or less in combined tax, penalties, and interest and you've filed all required returns. You can ask your tax pro for support with setting up an installment agreement when filing with Taxfyle.
You owe more than $50,000 and need monthly payments. You can still request an installment agreement, but not through the online tool. Expect the following:
- A higher monthly payment
- A request from the IRS for details about your finances
- The possibility that the IRS files a Notice of Federal Tax Lien against your property
If you're a business
If your business owes $25,000 or less and has filed all required returns, it may qualify for a payment plan. Businesses generally can't use the individual online application: call the number on your IRS notice, or reach the IRS business line at 800-829-4933.
If you're a sole proprietor or an independent contractor, apply as an individual instead.
How long approval takes
Apply online and you'll usually find out right away whether you're approved. Apply by mail using Form 9465 and the IRS typically responds within 30 days (your Tax Pro can assist with filing the Form 9465 on your behalf).
Don't wait to pay
Interest and penalties keep accruing until the balance is paid in full, so pay as much as you can as early as you can. Once an installment agreement is in effect, the late-payment penalty is cut in half for each month the agreement holds.
To apply, visit the IRS Online Payment Agreement application.
Your Tax Pro can walk you through which option fits your situation.