The deadline for filing your federal income tax return is Tuesday, April 17th—right around the corner. If you owe money to the IRS, you’re supposed to pay that amount in full when you file. But maybe you were expecting a refund or didn’t realize you owed such a large sum. If you’re wondering, “What if I can’t pay my taxes?” you’re not alone: each year, millions of Americans fall behind on their taxes.

We reached out to 4 personal finance experts to find out what you should do if you can’t afford to pay your taxes. Here’s their very best advice.

Step 1: Be sure to file on time.
You should always file on time, even if owe money and can’t afford to pay the full amount when you file.

“The most important thing to do when you’re struggling to pay your taxes is to not avoid them. The temptation may be real, but it can only hurt you as the IRS will charge interest, and potentially send your account to collections. At the very least, file on time and pay what you can.” John Schmoll, Frugal Rules

The first thing to remember is: Always file your taxes! It’s worse for you if you ignore the problem and don’t file. So, even if you can’t pay the bill, file.” Robert Farrington, The College Investor


If you don’t file and pay the full amount owed on time, you’ll most likely be charged interest penalties. Two penalties generally apply: One for filing late, and one for paying late.

  • The penalty for late filing can be as much as 5% of the unpaid tax amount each month, up to a maximum of 25%.
  • The penalty for late payment is generally 0.5% of the unpaid tax amount each month, up to 25% of the unpaid taxes.
  • If you filed late and are paying late, the maximum amount charged for both penalties is 5% per month.

To keep penalties to a minimum, you should file on time and pay as much as you can when you file. If you can’t meet the April filing deadline, consider requesting an extension—but note that an extension of time to file is not an extension of time to pay.

If you were impacted by a natural disaster in 2017, the IRS may provide you with a form of tax relief, like an extended deadline.

Step 2: Set up a payment plan.
Some people may qualify for up to 120 additional days to pay in full for no extra fee—though interest and other penalties continue to accrue until the bill is paid in full.

If you aren’t able to pay the balance in full within 120 days, experts recommend setting up a monthly installment agreement.

“Contact the IRS. The IRS is generally more than happy to work with you by setting up a payment plan that fits your budget. While you’ll still incur a penalty, you’ll remain in good standing with the IRS.” Kristin Larsen, Believe in a Budget

“Go to the IRS website and pick a payment plan. If you owe less than $50,000, it’s really that easy. Once you have selected a payment plan, honor it.” Jason Howell, Jason Howell Company Wealth Advisers


You can make monthly payments in a variety of ways, including direct debit from your bank account and payroll deduction. Payment plans come with setup and processing fees on top of the accrued penalties and interest, some of which may be reduced for lower income filers.

Step 3: Figure out how to pay the tax bill.
Next, you’ll have to create a budget and stay on top of the monthly payments.

“You want to find a way to bring in some extra income to pay the bill or cut back on something you don’t need. There are many opportunities to do either, which will help you raise the money to pay the tax bill.” John Schmoll, Frugal Rules

“You can look at selling stuff you own, getting a side hustle or second job, or even negotiating a lower amount with the IRS.” Robert Farrington, The College Investor


If you’re aiming to bring in more income to cover the taxes you owe, check out these tips for earning more, like selling your used electronics. There are also tons of ways to start a side hustle, like opening an Etsy shop or working as a baby sitter.

If you aren’t able to pay your full tax liability via the payment plan, you could pursue an offer in compromise. An offer in compromise allows you to settle your tax debt for less than the full amount owed.

Step 4: Plan for next year.
Figuring out how to pay this year’s taxes is important—but don’t stop there.

“Look ahead at your tax situation to see if there’s a way to avoid the problem in future years or set aside money in a savings account to help if it happens again.” John Schmoll, Frugal Rules


For example, if you’re working as an independent contractor—like driving for Uber or making deliveries for Postmates—your employer probably isn’t withholding taxes from your paychecks, so you might need to make quarterly estimated tax payments. Start planning now and identify ways to make sure your tax bill next April will be manageable.

RISE is proud to help hardworking Americans build better money habits. Check out our collection of free, interactive tools for setting savings goals and managing debt.

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