Owing money to the IRS is scary. You have many options, though – including the IRS itself.
Income tax preparation can be suspenseful. You gather all your W-2s and 1099s and other financial documents and try to enter all the numbers on the correct lines on the correct forms and schedules. All the while, even if you have some inkling of whether you’ll get a refund or will owe, you’re wondering what your final obligation will be.
If you got down to Line 37 (Amount You Owe) on your 2024 Form 1040 this year and saw an amount you couldn’t possibly pay, we hope you at least filed for an extension. Failure to file your federal income taxes can result in some serous penalties. You probably double- and maybe triple-checked your entries and your math, but the result was the same.
Got a big number in Line 37 and not enough money to pay it? You have options, including the IRS itself.
What do you do if you simply don’t have the money? Using IRS resources to pay the IRS is probably not the first thing that comes to mind. But it’s an option, one you may have to consider if you come up empty after exhausting other avenues. Here are some suggestions.
Common First Steps
Individuals who are faced with an unmanageable tax bill often start by asking relatives and even friends for some help. It’s certainly a legitimate reason for needing money (it’s not like you’re trying to finance a week in Cancun).
If no one in your circle is flush enough, your next step would probably be to look for a commercial loan. There are several good sites that offer comparison shopping, including:
Your own bank or credit union. That may be the best place to start, especially if you’ve developed a long-term relationship.
Lending Tree. In business since 1996, Lending Tree has a network of 300+ lenders. You complete an application, and the service selects five for you to compare and consider. A 3-year personal loan for $20,000, for example, might be available for as little as 6.99% APR.
Bankrate was launched in 1976 as a print publication called Bank Rate Monitor. Like Lending Tree, it learns about your financial needs and presents you with loan options that might be attractive to you. The site also offers other tools, like editorial content, reviews, and financial calculators.
Intuit Credit Karma helps you understand your credit score and try to improve it, but it also recommends financial products like loans based on the information you supply.
How Can the IRS Help?
If you can get a loan independent of the IRS, that’s optimal. But if you’ve been unable to do so, the agency offers two options.
The IRS offers an Installment Agreement that you might consider applying for if you can’t pay your income taxes.
The Short-Term Payment Plan is one option. It’s designed for individuals who can pay off their balance in 180 days or less. Unfortunately, penalties and interest will still accrue until your debt is paid. You must owe less than $100,000 in combined tax, penalties and interest to qualify. There are numerous ways to pay, and you can apply online here.
You may qualify for the Long-Term Payment Plan if you owe $50,000 or less in combined tax, penalties and interest. You can start an application here.
More information and FAQs on both plans can be found here.
How Do You Avoid Having a Huge Tax Bill?
Year-round tax planning is the answer. We’ve written about this before. We know it’s easy to just wait and see how the chips fall in April, especially if you’ve never had to pay in much—if at all. So many things can make a big difference in your income tax obligation, like:
A change in marital status, or grown-up children getting off your payroll.
A new job, or a raise at your existing one. You never know when even a little more money is going to move you into a higher tax bracket.
A windfall of some sort, like a lucrative investment sale or a lucky trip to Vegas.
A reduction in business expenses if you’re self-employed.
We can help you devise a plan for avoiding a big tax bill. We’d start with the basics. If you’re self-employed, we can work with you on calculating your quarterly estimated taxes. If you’re a W-2 employee who has experienced some major life changes, we’ll look at your W-4 and see if you need to adjust your withholding.
Beyond that, it’s just a matter of carefully recording your income and expenses (and analyzing their impact on your tax liability) so you know what you’re bringing in and how you might offset that with credits and deductions.
Don’t know where to start? Schedule an appointment with us. We’ll look at your financial profile and see where we might be helpful in creating your 12-month plan. We can even prepare your taxes in 2026 if you’d like. We’ve dealt with a wide variety of income tax scenarios, and I’m sure we can help you, too, to avoid a big surprise in the spring.