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I Can't Pay My Taxes?

What do you do if you can't pay the IRS the taxes you might owe in April? You have a few options:

You could borrow the money from a bank or your parents. You could put it on a charge card. Or you could borrow the money from the IRS.

Taxpayers have always had the option of paying their taxes over time by entering into an installment agreement with the IRS, a process that has recently been made easier. Historically, you had to prove you couldn't pay the taxes in full before they would agree to a payment plan. Then the IRS realized they could save time and effort and raise more money by making the installment agreement process almost automatic.

If you owe less than $50,000 for personal taxes or $25,000 for business taxes, the process can be done online and is almost automatic. Here is the link that you can use to establish the plan: Online Payment Agreement Application

Part of the process establishes the amount that you need to pay each month. If you do not meet the requirement above you need to complete Form 9465. Here is a link to the form: Paper Payment Agreement Application

You will have to divulge personal information such as your phone number and bank account information. You then submit a down payment and determine how much you will pay each month so you can pay off what you owe within a reasonable period of time.

You can even arrange to have payroll deductions for your back taxes by completing this form: Paying Through Payroll Form

Give long thought to doing this. Do you really want your employer to know that you did not pay your taxes?

Some important points:

  1. There is a fee you will be required to pay when you apply for the agreement.
  2. I suggest having the IRS automatically deduct it from your checking account each month. This makes sure that the payment is made. The IRS gets really testy if you don't. This could void your installment agreement and cause the IRS to put a lien on your bank account and other property.
  3. You are going to be charged interest and penalties on the balance due until it is paid in full. The total interest and penalties can rival charge card interest rates, so make the payments as high as you can afford, and pay extra if you can.
  4. You could lose the installment plan if you fail to file and pay your taxes on time in a future year while the payment plan is in effect.

If you cannot pay your federal taxes, you may not be able to pay your state taxes either. The states also have installment plans in place to collect the taxes. However, if all the states are like Massachusetts, the process is difficult to go through. Usually, your state taxes are much less than your federal taxes, so my suggestion is to pay the state taxes in full if you can, and get the installment agreement with the IRS for your federal taxes.


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I desire to present only accurate information on this blog. However, I do not guarantee the accuracy or timeliness of the information. The information on this blog is subject to change without notice. I do not make any warranty, expressed or implied, or assume any liability or responsibility for the accuracy, completeness, or usefulness of the documents or information available on this blog. Any reference to a product, service, publication or web site does not imply an endorsement of that product, service, publication, or web site. If you have any questions or comments about any information provided on this blog, please email me at This email address is being protected from spambots. You need JavaScript enabled to view it..


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