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Practical Money Matters Radio Series

February 18, 2013
Can't Pay Your Taxes?

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If you can't pay your income taxes by April 15, don't panic – instead of ignoring the deadline, try these tips.

Transcript

If you can't pay your income taxes by April 15, don't panic. But don't ignore the deadline either, and certainly don't wait for the IRS to contact you. Acting quickly gives you more repayment options and can significantly lower the penalties you owe.

At minimum, ask for a "payment extension" - it will cut the penalties by 90 percent.

The IRS offers several repayment alternatives:

  • If you only need a short while, you can pay by credit card. You'll pay a convenience fee of around 2 percent.
  • If you can pay the full amount within 120 days, you may qualify for a short-term extension.
  • If you need longer, an installment agreement may be your best alternative.
  • In extreme hardship cases, the IRS may negotiate a reduction.

Bottom line: The sooner you act, the more options you have.


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