The 2025 Tax Season requires millions of Americans to pay taxes and file their 2024 tax returns on time. Not doing so may imply facing IRS penalties. Thus, this is what to do if you can’t pay your taxes in full.
Check out the many payment options the IRS offers. Those who have saved money and can afford tax payments can simply use Direct Pay with their bank account. The Agency also allows taxpayers to pay by credit card, debit card, or even digital wallet (fees may apply).
Need more time to pay taxes to the IRS?
The Internal Revenue Service allows taxpayers to apply for a payment plan. Payment plans can be for both individuals and businesses. However, fees may apply so that could be a disadvantage.
Still, it will be better to inform the IRS you cannot pay taxes and see the best options to avoid penalties and fines. Here are the most common payment plans:
- simple,
- streamlined,
- in-business trust fund express,
- guaranteed and
- partial payment installment agreements.
IRS & offer in compromise
Some taxpayers may be eligible for an offer in compromise in the United States. The IRS will check if you can settle your tax debt for less than you owe with an offer in compromise.
The Agency reminds taxpayers that they can make payments and check their eligibility in their IRS online account. A offer in compromise may be possible when you cannot afford to pay your full tax liability and if you did so, you would create financial hardship.
The Internal Revenue Service will take a few things into account:
- taxpayer’s ability to pay their full tax liability
- Income
- Expenses you currently have
- Asset equity
Generally, the Agecny approves an offer in compromise when the amount you offer represents the most the Agency can expect to collect within a reasonable period of time. Check other plans before because this will be your last option: https://www.irs.gov/taxtopics/tc202