Can't pay your taxes? Here are your options
Can't afford your tax bill You have options — from IRS payment plans to tax relief companies.
The deadline to file your 2023 taxes was April 15, 2024. While many Americans received a refund, the percentage who will owe the IRS has been steadily rising over the years, according to data from the consumer analytics platform Civic Science, edging up from 39% in 2021 to 43% in 2023.
Not paying your tax liability could result in the government garnishing your wages, placing a lien on your property or even revokubf your passport.
If you can't afford to pay your tax bill you have several options, including IRS-sponsored plans, personal loans and tax relief companies.
Find a personal loan that's right for you
IRS installment plan
If you don't have the cash right away, the IRS has installment plans that can help. There's no getting around interest and penalties, but you'll avoid more severe consequences.
The IRS's short-term payment plan gives taxpayers up to 180 days to settle their debt. It does carry a failure-to-pay penalty of 0.5% a month and interest will accrue on what you owe until the balance reaches 25% of the total due.
You can still get on a payment plan if you won't have the funds within six months, but there are additional fees. And, as with a short-term plan, you'll be hit with a 0.5% failure-to-pay penalty.
If you register for automatic monthly withdrawals online, there is a $31 set-up fee. If you set up direct debit over the phone, through the mail or in person, however, the fee is $107. You can opt to make regular payments yourself, but the fee is $130 if you register online or $235 over the phone, through the mail or in person.
With a long-term payment plan, you can typically set how much your monthly payment is but you must choose an amount that enables you to clear your debt in 72 months.
Apply for an offer in compromise
You can also apply to the IRS for an offer in compromise (OIC), a request to settle your tax bill for less than the full amount owed. The agency considers your income, expenses and ability to pay, among other factors, and approvals are rare: According to the most recent data from the IRS, only about a third of the 36,000 OICs submitted in 2022 were accepted.
Pay with a credit card
Paying your taxes with a credit card sidesteps penalties and interest from the IRS, but could open you up to a higher APR and put you even deeper in debt. One option is applying for a credit card with a 0% APR introductory offer. This strategy is only advisable if you can pay off the balance before the introductory period expires. Otherwise, you'll be hit with hefty interest payments.
The Wells Fargo Reflect® Card has an introductory 0% APR offer on both purchases and balance transfers from account opening that lasts 21 months (18.24%, 24.74% or 29.99% variable APR thereafter), giving qualified users nearly two years to pay off their tax bill interest-free. The balance transfer fee is 5%, min: $5
Wells Fargo Reflect® Card
Rewards
None
Welcome bonus
None
Annual fee
$0
Intro APR
0% intro APR for 21 months from account opening on purchases and qualifying balance transfers.
Regular APR
18.24%, 24.74%, or 29.99% Variable APR
Balance transfer fee
5%, min: $5
Foreign transaction fee
3%
Credit needed
Excellent/Good
See rates and fees. Terms apply.
The Amex EveryDay® Credit Card's 0% intro APR rate on purchases and balance transfers lasts for only 15 months (then 18.24% to 29.24%) but cardholders get a welcome bonus of 10,000 points if they spend $2,000 in the first six months after opening the card.
Amex EveryDay® Credit Card
Rewards
2X Membership Rewards® points at U.S. supermarkets on up to $6,000 per year in purchases (then 1X), 1X Membership Rewards® points per dollar spent on all other purchases
Welcome bonus
Earn 10,000 Membership Rewards® points after you make $2,000 in purchases in your first 6 months of card membership
Annual fee
$0
Intro APR
0% for the first 15 months on purchases and balance transfers from the date of account opening
Regular APR
18.24% to 29.24% variable
Balance transfer fee
Either $5 or 3% of the amount of each transfer, whichever is greater.
Foreign transaction fee
2.7%
Credit needed
Excellent/Good
See rates and fees, terms apply.
If you pay by credit card, the IRS does charge a service fee that varies by card type and payment amount.
Pay with a personal loan
If you don't have great credit, a personal loan may be easier to get approval for than a 0% APR credit card. Before you apply, however, compare rates and fees with what you would pay through an IRS installment plan. (Be sure to consider how long it will take to settle your tax bill.)
Avant Personal Loans is a great option if you have poor credit, since it accepts borrowers with credit scores as low as 580. Loans are capped at $35,000 and you'll have 12 to 60 months to repay the loan with an APR that ranges from 9.95% to 35.99%.
Avant Personal Loans
Annual Percentage Rate (APR)
9.95% to 35.99%
Loan purpose
Debt consolidation, major expenses, emergency costs, home improvements
Loan amounts
$2,000 to $35,000
Terms
24 to 60 months
Credit needed
Poor/Fair
Origination fee
Administration fee up to 9.99%
Early payoff penalty
None
Late fee
Up to $25 per late payment after 10-day grace period
Terms apply.
Click here to see if you prequalify for a personal loan offer.
You only need a credit score of 300 to be considered for a loan by Upstart. The online lending platform offers loans of up to $50,000, with repayment terms of between 36 and 60 months.
Upstart Personal Loans
Annual Percentage Rate (APR)
7.8% - 35.99%
Loan purpose
Debt consolidation, credit card refinancing, wedding, moving or medical
Loan amounts
$1,000 to $50,000
Terms
36 and 60 months
Credit needed
FICO or Vantage score of 300 (but will accept applicants whose credit history is so insufficient they don't have a credit score)
Origination fee
0% to 12% of the target amount
Early payoff penalty
None
Late fee
The greater of 5% of monthly past due amount or $15
Terms apply.
Work with a tax relief company
While the Federal Trade Commission recommends working with the IRS directly, you may feel overwhelmed or confused. Tax relief companies work with the IRS or your state revenue department to reduce or eliminate your tax debt, arrange installment plans and stop garnishments and liens.
Community Tax offer a free initial consultation and charges an average of $295 for the investigation phase, the lowest among the tax relief companies we've reviewed. You do need to have at least $7,500 in tax debt and it doesn't operate in Minnesota or North Dakota.
Precision Tax Relief requires clients to have a tax debt of at least $10,000, but it has a 94% success rate with offers in compromise. It received an A+ rating from the Better Business Bureau and offers a free 30-day money-back guarantee.
Precision Tax Relief
Cost
Not disclosed
Highlights
Precision Tax Relief provides services in all 50 states and requires clients to have a minimum tax liability of $10,000. It offers a 30-day money-back guarantee.
Precision Tax does not offer audit representation and will only address state tax debt if you also have federal tax debt.
Money-back guarantee applies to tax resolution services only and cannot be applied to any additional services offered by Precision Tax ReliefTypes of taxes serviced
Federal and state
In business since
1967
Borrow against your home equity
If you own your residence, you can leverage your home equity to get cash with a home equity line of credit (HELOC). The interest rate on a HELOC loans is usually lower than a credit card or personal loan. But they typically start at $10,000, so only consider a HELOC loan if your tax bill is at least five figures.
Fairway Independent Mortgage Corporation ranked number one in JD Power's mortgage origination satisfaction study in 2023 and claims it can provide funding in as little as five days.
Fairway Independent Mortgage Corporation
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional loans, FHA loans, VA loans, USDA loans, physician loans, renovation loans, jumbo loans
Terms
10-, 15-, 20-, 25-, 30-year terms available for fixed-rate loans; 5-, 7-, or 10-year introductory period for ARM loans
Credit needed
580 for FHA loans, 620 for conventional loans
Minimum down payment
3% if moving forward with conventional; 0% if moving forward with USDA
- Ranked No. 1 in Customer Satisfaction in mortgage origination by JD Power
- Its Fairway Community Access™ provides borrowers in qualifying areas with up to $7,000 to put towards down payment or closing costs. The program has no income limit and in some cases includes an appraisal credit, lender credit for a one-year home warranty, housing counseling credit, temporary buy down, and title insurance credit.
- Affordable housing loan options available
- Provides a large amount of FHA loans
- Easy-to-use website and app
- Not transparent about rates and fees online
- Does not provide home equity loans or a HELOC
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PNC combines low rates, flexible requirements and great customer service. There is a low $100 minimum draw and, unlike most lenders, it will let you switch between a variable rate and a fixed rate after withdrawing your funds.
PNC Bank
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, HELOCs, Community Loan and Medical Professional Loan
Terms
10 – 30 years
Credit needed
620
Minimum down payment
0% if moving forward with a USDA loan
Terms apply.
Read our PNC Bank mortgage review
- Offers a wide variety of loans to suit an array of customer needs
- Available in all 50 states
- Online and in-person service available
- Doesn't offer home renovation loans
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View Less
Compare HELOC offers
FAQs
Does the IRS have a hardship program?
The IRS offers something similar to a hardship program called an offer in compromise. Previously called the Fresh Start program, it allows you to settle your tax debt for less than you owe.
What happens if you can't pay your taxes?
You can ask the IRS for up to 120 days to pay your tax bill or apply for an offer in compromise or a payment plan that allows you to spread out the debt over months or years. If you can prove financial hardship you can qualify for "currently not collectible status" and avoid having to pay until your circumstances improved.
How long does the IRS give you to pay tax debt?
Your repayment timeline depends on the type of plan you selected: Short-term plans give you up to 180 days while longer-term plans can grant you up to 72 months.
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For rates and fees of the Amex EveryDay® Credit Card, click here.