What if I can't pay my taxes?
The April 18, 2016 payment deadline is just around the corner, and you just discovered you owe more tax than you can afford to pay right now.
First of all, don't panic! Follow our step-by-step guide to minimize – or even eliminate – late-filing and late-payment penalties.
If you do nothing else on this page, at least file your return (or extension) by April 18, 2016.
The late-filing penalty can be up to 10 times higher than the late-payment penalty!
Don't let an unexpected tax bill stop you from filing. If you can't finish your return by April 18, 2016, file an extension so you can at least avoid the higher late-filing penalty.
Late-payment penalties and interest are calculated as a monthly percentage of your outstanding balance after April 18, 2016. The less you owe and the sooner you pay it off, the better.
If you're filing an extension through TurboTax, you can also submit your partial payment; we'll will walk you through this process when you prepare your extension.
To make a partial tax payment when filing your return, select the option I will mail a check when asked how you want to pay your federal taxes. (Don't choose the direct debit or credit card payment options; these will charge the full owed amount, which you probably don't want.)
You can then either mail a check or money order for the partial payment, or submit online payment directly to the IRS.
If you cannot pay off your tax bill in one shot, the IRS might give a few more months to pay. There's no fee to set this up, other than applicable penalties and interest until your bill is paid off.
Give the IRS a call at 1-800-829-1040 if you think you can pay off your outstanding tax bill within 4 months. (You might want to call them after the April 18, 2016 hubbub dies down, so you're not sitting on hold forever.)
You can also apply for the IRS installment plan, but you need to file your return first; it's not available if you only filed an extension. You also have to meet certain qualifications and there might be a fee (up to $120) to set this up.
Here are the different ways to apply:
- Online at the Online Payment Agreement Application site;
- By filling out Form 9465 in TurboTax or at IRS.gov;
- By calling the IRS at 1-800-829-1040; or
- By visiting your local IRS office in person.
Can I get an installment agreement for my state taxes?
Possibly. Many states allow taxpayers to request an installment agreement, as long as certain conditions (which vary from state to state) are met.
The process for requesting a state installment agreement also varies; some states only require a phone call, whereas other states make you fill out a form.
As a rule, TurboTax State programs do not support state installment agreement requests, but there are exceptions such as California's Form 3567.
If you do not see this option in your state program interview, contact your state tax agency and ask if they offer an installment agreement.
- What if I missed the April 18 filing deadline?
- What's the IRS penalty for filing late?
- Can I file a Form 9465 (Installment Agreement Request) in TurboTax?
- What if I can't pay my taxes due to financial hardship or a disaster?