The short answer
If you cannot pay your federal tax bill in full, you still have options — but the order matters. File your return on time anyway, pay as much as you can, and then set up a way to pay the rest. The IRS offers payment plans, and in some situations other collection alternatives. Interest and penalties generally keep running on whatever remains unpaid, so the sooner the balance goes down, the less it grows.
This guide is for a balance you already know about — usually on a return you have filed. If you have not filed the return itself, read I missed the tax deadline — what happens now? first.
Filing and paying are two separate obligations
Not being able to pay is not a reason to skip filing. The two have separate penalties: one for filing late and one for paying late. The IRS generally recommends filing on time even if you cannot pay, because the failure-to-file penalty is usually much larger than the failure-to-pay penalty. Filing on time keeps the problem limited to the unpaid balance.
Step 1: pay what you can now
Any amount you pay by the due date reduces the balance that interest and penalties are figured on. Even a partial payment helps. You can pay through IRS online payment options, such as a direct payment from your bank account.
Step 2: choose a payment option for the rest
| Option | Who it may fit | What to know |
|---|---|---|
| Pay in full | You can pay the whole balance now | Stops further interest and penalties on that balance |
| Short-term payment plan | Individuals who owe less than $100,000 in combined tax, penalties, and interest (current IRS online guidance) | Pay the balance within 180 days; interest and penalties continue until paid |
| Long-term installment agreement | Individuals who owe $50,000 or less in combined tax, penalties, and interest and have filed all required returns (current IRS online guidance) | Monthly payments; setup fees may apply; interest and penalties continue until paid |
| Other collection alternatives | People who cannot pay through a plan | For example, an Offer in Compromise or a temporary delay of collection — each has its own requirements |
The dollar limits above are the IRS's current eligibility guidance for applying online. If you owe more, or do not qualify online, you may still be able to request a plan by other means — see the IRS payment-plan page.
Payment-plan setup fees depend on the plan type, how you apply, and how you pay, and the IRS updates them. Check the IRS payment-plan page for the current figures before you apply.
Other options, in appropriate cases
- Offer in Compromise. An agreement to settle a tax debt for less than the full amount. It is not automatic: the IRS considers your ability to pay, income, expenses, and asset equity, and many applications are not accepted.
- Temporary delay of collection. If paying would cause financial hardship, the IRS may temporarily delay collection. The debt is not forgiven, and penalties and interest continue to accrue.
What a payment plan does not do
- It does not stop interest. Interest and applicable penalties generally continue until the balance is paid in full.
- It does not mean everyone qualifies. Eligibility depends on the amount owed, your filing history, and other conditions.
- It does not replace filing. Future returns still need to be filed and paid on time.
Example
Dana files her return on time in April and owes $6,000 she cannot pay at once. She pays $1,500 with the return and applies online for a payment plan for the remaining $4,500. Because her balance is under the online limits, she may be able to set up a plan online if she meets the other conditions; interest and the failure-to-pay penalty continue on the unpaid part until it is paid off, so she pays it down as fast as her budget allows.
If you owe because no tax was withheld from your income — for example, freelance or 1099 work — estimated tax payments during the year can keep the balance from building up. See Quarterly estimated taxes.