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What Can You Do if You Can’t Pay Your Taxes?

We're in ‘Tax season,' and like millions of Americans, you could dread the number appearing in that “taxes you owe” box if you don't qualify for a tax refund.

When combined with record inflation that most people feel has not realistically indexed with most tax benefits, smaller tax refunds or owing taxes will be a painful reality for many people who typically would not have a balance due.

If you owe taxes but can't afford to pay your income tax bill, don't panic! Here's what you can do if you can't pay what you owe.

It sounds counterintuitive initially, but this step is one of the most important things you can do. This is because massive tax debts and IRS problems virtually always stem from tax returns that are missing in the first place, sometimes for years.

Always File Your Tax Return First

If you don't file your tax return by the deadline – April 18, 2023, for the 2022 tax year, October 16, if you file for an extension – the IRS can assess a failure-to-file penalty.

It starts at 5% of your unpaid taxes for each full or partial month that your tax return is late, with a maximum of 25% of the balance.

If you have a balance due that you cannot pay and fear collection actions from the IRS, you can contact them and request that they make your account temporarily uncollectible.

Request That Your Account Become Currently Not Collectible

By going into “currently not collectible” status, it will stave off any attempts made by the IRS to collect on your balance. Depending on your tax filing history, the agent may request proof of your financial situation, where you must fill out a collection information statement.

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