What to do if you can't pay your taxes
Owe more than you can pay? You have real options — installment plans, hardship status, even reduced settlements. Here's where to start.
If tax day is coming and the number on the bottom line feels impossible, take a breath. Owing the IRS is far more common — and far more workable — than most people realize. The worst thing you can do is nothing. The best thing you can do is keep reading.
First: file the return, even if you can't pay
The penalty for failing to file is roughly ten times the penalty for failing to pay. File on time, even if you have to leave the balance unpaid. This single step saves most people thousands of dollars and stops the largest penalty from running.
Then: pick the option that fits your life
- Short-term payment plan (up to 180 days) — for amounts you can pay off within six months.
- Long-term installment agreement — monthly payments stretched over up to 72 months. Often approved automatically for balances under $50,000.
- Currently Not Collectible status — if paying anything would prevent basic living expenses, the IRS can pause collections entirely.
- Offer in Compromise — for situations where the full amount truly can't be paid, the IRS may accept a fraction as full settlement.
What to avoid
Skip the late-night TV ads promising to settle your tax debt for pennies on the dollar. Most charge thousands upfront and deliver less than you could get yourself — or with a local attorney whose fees are flat and disclosed.
When to call someone
If your balance is over $25,000, if a notice of intent to levy has arrived, or if you simply don't know which option fits — that's the moment to talk to a tax attorney. The first conversation should be free and unhurried.
Common questions
People often ask…
Will the IRS take my house if I owe back taxes?
Almost never as a first step. The IRS prefers payment plans and wage garnishment long before any property action. Acting early keeps things at the negotiation stage.
How long does the IRS have to collect from me?
Generally 10 years from the date the tax was assessed. After that, the debt expires. But certain actions — like filing an Offer in Compromise — can pause that clock.
Can interest and penalties be reduced?
Yes. Penalties can often be removed through First-Time Abatement or reasonable-cause requests. Interest is harder to reduce but sometimes possible when the underlying penalty is removed.
Want to talk through your own situation?
The first conversation is free and confidential. I'll listen, answer your questions, and tell you honestly what's possible.