While many taxpayers receive a tax refund each year, others find themselves in a situation where they owe federal taxes. If you’re wondering, “What if I owe the IRS money?”—don’t worry. The IRS offers several options to help taxpayers manage their tax obligations, even if they can’t pay the full amount immediately.
If You Owe Taxes, When Are They Due?
All owed tax payments are due by the annual tax deadline, typically April 15. Missing this deadline can result in penalties and interest, so it’s important to act quickly if you have an IRS balance due.
Ten Tips for Taxpayers Who Owe Federal Taxes
1. Pay Your Tax Bill Promptly
If you receive a bill for unpaid taxes, pay the full amount as soon as possible. This includes any penalties and interest. If you can’t pay in full, consider taking out a loan to avoid additional IRS fees.
2. Request Additional Time to Pay
You may qualify for a short extension to pay your tax in full. Use the IRS Online Payment Agreement tool or call 800-829-1040.
3. Pay by Credit Card
Paying with a credit card might be cheaper than accruing IRS penalties and interest. Authorized payment processors include:
- Pay1040.com
- PayUSAtax.com
- OfficialPayments.com
4. Use Electronic Funds Transfer
You can pay your IRS balance due via the Electronic Federal Tax Payment System (EFTPS) or by calling 800-555-3453.
5. Set Up an Installment Agreement
If you can’t pay in full, request an installment agreement to pay monthly. You must be current on all tax filings and estimated payments. Visit IRS.gov for more details.
6. Use the Online Payment Agreement Tool
If you owe $50,000 or less (including penalties and interest), you can apply online for a long-term payment plan. If you owe less than $100,000, you may qualify for a short-term plan.
7. Submit Form 9465
Mail Form 9465, Installment Agreement Request, with your bill. The IRS will respond within 30 days. Download Form 9465.
8. Complete a Collection Information Statement
If you owe more than $25,000, you may need to submit Form 433-F. Download Form 433-F.
9. Understand User Fees
Installment agreements come with fees:
- $31 for online applications with direct debit
- $107 for phone/mail/in-person applications with direct debit
- Reduced fees may apply for low-income individuals
10. Adjust Your Withholding
To avoid owing taxes in the future, update your W-4 with your employer. Use the IRS Withholding Calculator to determine the correct amount.
Additional Information
- Get help with tax debt (IRS)
- Publication 594: The IRS Collection Process
- Publication 966: Electronic Payment Options
- Call 800-TAX-FORM (800-829-3676) for printed forms