What To Do If You Can’t Pay Your Taxes: Smart Moves That Could Save You Stress and Money

Tax season is rarely a walk in the park, but it can be downright overwhelming when you owe the IRS and can’t pay. At JS Morlu, we get it—life happens, and sometimes finances don’t line up with federal deadlines. The good news? You have more options than you might think.

Let’s walk through the most practical—and least painful—ways to handle a tax bill you can’t immediately cover. If you’d rather watch, we’ve also included a short explainer video below.

First Things First: Extensions Don’t Extend Your Payment Deadline

Here’s a common misconception: filing a tax extension buys you more time to pay. It doesn’t.

An extension only gives you more time to file your return—not more time to pay. That means if you owe, interest and penalties will still start accumulating after the April deadline, even if you filed for more time.

The IRS Might Be More Flexible Than You Think

Believe it or not, the IRS isn’t always the villain in the story. They offer payment solutions that can help you avoid defaulting or incurring massive penalties.

1. Short-Term Payment Plan (If You Can Pay Within 180 Days)
If you can pay the full balance within six months and owe less than $100,000 (including penalties and interest), you may qualify for a short-term payment plan. No setup fee required—just interest and late penalties.

2. Long-Term Installment Agreement
If you owe $50,000 or less, you can request a monthly payment plan that stretches up to six years. The setup fee is higher, but it’s often a safer option than turning to high-interest credit cards.

💡 JS Morlu Pro Tip: Set this up online through the IRS Payment Portal. No need to wait on hold for hours.

Alternatives Outside the IRS (But Use Caution)

Not everyone qualifies for a payment plan—or maybe you just don’t want to deal with the IRS. Here are other common options, ranked by potential cost and risk.

1. Borrow from Family or Friends
This is often the most cost-effective solution. No application fees, no credit checks, and potentially little to no interest. Just be sure to formalize it with a simple agreement to avoid awkwardness later.

2. Home Equity Loan
If you own a home, tapping into equity could offer lower interest rates compared to credit cards. However, remember: you’re putting your house on the line.

3. Credit Cards: Proceed With Caution
Using plastic is fast—but rarely smart. You’ll get hit with a credit card processing fee (typically 1.87% to 1.99%) and high APRs if you don’t pay it off quickly. This is often the most expensive route.

The Retirement Account Temptation

Dipping into your 401(k) or IRA should be a last resort.

Here’s why:

• You’ll pay income tax on the amount withdrawn.
• If you’re under age 59½, there’s also a 10% early withdrawal penalty.
• You’re sacrificing long-term financial growth for short-term relief.

Unless you’re facing financial catastrophe, this is a strategy to avoid.

Could You Pay Less Than You Owe?

In some cases, yes.

If you’re facing genuine financial hardship, you might qualify for an Offer in Compromise. This allows you to settle your debt for less than the full amount. The IRS considers your:

• Income
• Expenses
• Asset equity
• Ability to pay

It’s tricky and takes time, but if approved, it can be a lifesaver. JS Morlu can help you determine if this is a viable route.

Recap: Which Option Is Right for You?

Final Thoughts: You’re Not Alone

Facing a tax bill you can’t afford is stressful, but you have options—and you don’t need to navigate them alone.

At JS Morlu, our tax experts can help you explore your payment choices, file the right paperwork, and avoid the most costly mistakes. From IRS negotiations to personalized tax planning, we’ve got your back.

📞 Need help now? Contact us for a free consultation and take the first step toward peace of mind.

JS Morlu LLC is a top-tier accounting firm based in Woodbridge, Virginia, with a team of highly experienced and qualified CPAs and business advisors. We are dedicated to providing comprehensive accounting, tax, and business advisory services to clients throughout the Washington, D.C. Metro Area and the surrounding regions. With over a decade of experience, we have cultivated a deep understanding of our clients’ needs and aspirations. We recognize that our clients seek more than just value-added accounting services; they seek a trusted partner who can guide them towards achieving their business goals and personal financial well-being.
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