Struggling with Taxes? Find Help and Solutions!

Tax season can be stressful, especially if you find yourself facing a bill you can’t afford to pay in full. But don’t panic—there are options to help you manage your tax debt without making things worse. Here’s what you should do if you owe the IRS (or your state) more than you can handle right now.

1. File Your Tax Return Anyway

Even if you can’t afford to pay your tax bill, file on time to avoid the Failure to File Penalty, which is 5% of your unpaid taxes per month (up to 25%). This is much higher than the Failure to Pay Penalty, so filing your return—even without payment—is your first priority.

If you miss the deadline, file as soon as possible to reduce penalties.

2. Pay What You Can

Even if you can’t pay the full amount, send whatever you can afford. The IRS charges interest and penalties on the remaining balance, but paying part of it upfront reduces how much you’ll owe in extra fees over time.

3. Set Up a Payment Plan (Installment Agreement)

If you owe less than $50,000, you may qualify for an IRS Installment Agreement, which allows you to pay your balance in smaller monthly payments over time.

How to Apply:

Apply online at IRS.gov

Call the IRS at 1-800-829-1040

Submit Form 9465, Installment Agreement Request

✅ You can typically set your own monthly payment amount, as long as it’s reasonable.

✅ The IRS won’t garnish wages or seize assets as long as you make payments on time.

Keep in mind that interest still accrues, but this is often a better option than high-interest loans or credit cards.

4. See If You Qualify for an Offer in Compromise

An Offer in Compromise (OIC) allows you to settle your tax debt for less than what you owe—but you have to prove financial hardship.

The IRS considers:

✔️ Your income

✔️ Your expenses

✔️ Your assets and ability to pay

Not everyone qualifies, but if paying the full amount would cause serious financial hardship, it’s worth applying.

You can check if you’re eligible using the IRS Offer in Compromise Pre-Qualifier Tool.

5. Request a Temporary Delay Due to Hardship

If you’re in a temporary financial crisis, you can ask the IRS to classify your account as “Currently Not Collectible” (CNC).

This doesn’t erase your debt, but it pauses collection efforts, including wage garnishments and bank levies, while your financial situation improves.

To request CNC status, you’ll need to prove financial hardship by providing details about your income, expenses, and assets. Call the IRS at 1-800-829-1040 to discuss your situation.

6. Avoid High-Interest Loans

If you’re considering a payday loan, cash advance, or high-interest credit card to cover your tax bill, think twice. The IRS typically charges lower interest rates than these lenders, making an installment plan a better option in most cases.

If you must borrow, look for a low-interest personal loan or a 0% interest credit card (if you can pay it off quickly).

7. Check for Penalty Relief

If you usually pay on time and this is your first time owing, you may qualify for First-Time Penalty Abatement. The IRS might waive penalties, especially if you have a good payment history.

To request penalty relief, you can call the IRS or submit a written request with Form 843 (Claim for Refund and Request for Abatement)

8. Adjust Your Withholdings for Next Year

If you didn’t expect to owe this much, you may need to adjust your tax withholdings (if employed) or make estimated payments (if self-employed) to avoid this situation next year.

✅ For W-2 Employees: Update your Form W-4 with your employer to have more taxes withheld from your paycheck.

✅ For Self-Employed Workers: Consider making quarterly estimated tax payments to spread the tax burden throughout the year.

Final Thoughts

Owing taxes is stressful, but ignoring the problem only makes it worse. The key is to take action quickly—file your return, explore payment options, and reach out for help if needed.

If you need guidance on setting up a payment plan or applying for tax relief, I’m here to help! Contact me for a consultation and let’s find the best solution for your situation.

Need help? Message me today!