Missing payments on your car, credit cards, or housing can cause serious stress—but not having the money to pay your income taxes on time can feel even worse. You’ve likely heard stories about penalties, fines, or even asset seizures, and it makes sense to want to avoid those outcomes.
Borrowing from friends or family is one possible solution, but if that’s not an option, you still have alternatives. You could look into a low-interest credit card or a personal loan to cover what you owe, for instance. And if that doesn’t work out, there are still other options, like going directly to the IRS for assistance. We’re here to walk you through all the possibilities to help you choose the right path of action.
Where Can You Get a Loan or Credit Card to Pay Your Taxes?
If you’re not ready to approach the IRS for help, you could consider applying for a loan.
Bankrate.com has existed since 1976, when it was a print publication called Bank Rate Monitor. It’s a great resource for comparing CD rates, credit cards, home equity loans, and personal loans for many purposes, including taxes. The site has a step-by-step wizard that walks you through the process of finding and comparing suitable loans. Bankrate also offers related editorial content, financial calculators, and reviews.
Bankrate’s loan comparison wizard (Credit: Bankrate/PCMag)
Many other financial service websites allow you to search for potential loan matches once you provide some personal information and define your needs. Credit Karma is one of the best. Besides providing an analysis of your current credit score and how you can improve it, the site makes recommendations for personal loans that you could use to pay income tax bills.
Loan search in Credit Karma (Credit: Intuit/PCMag)
LendingTree has existed since 1996. After you complete one application form, the service will match your needs to five lenders from its network of more than 300.
Finally, if you already have a relationship with a credit union or traditional bank, you could see what they can offer you. With any loan, you need to make sure its terms are more favorable than the IRS’s payment plans.
Bankrate.com, Credit Karma, and LendingTree all offer tools and resources related to credit cards as well. You could potentially use a card with a 0% introductory rate to pay the IRS and then pay off your balance in this initial period.
You shouldn’t pursue either a new credit card or a personal loan lightly. Either can turn into a financial burden or issue later on if you aren’t responsible about paying them back quickly. If you have a way to get the IRS what you owe without assistance, that’s always the better option.
What Payment Plan Options Does the IRS Offer for Taxes?
Getting a loan from a financial institution is the best way to keep things simple. If you prefer not to go that route, you can apply for one of two plans from the IRS.
Short-Term Payment Plan
The Short-Term Payment Plan is an option if you can pay the amount you owe in 180 days or fewer. You still accrue penalties and interest (more on that later) until you pay the total amount. You can apply online if you owe less than $100,000 in combined tax, penalties, and interest. This plan is available only to individuals, including sole proprietors and independent contractors.
Long-Term Payment Plan (Installment Agreement)
You can also apply online for the Long-Term Payment Plan (Installment Agreement), which involves monthly payments. Individuals who owe $50,000 or less in combined tax, penalties, and interest are eligible, as are businesses that owe less than $25,000.
How to Set Up a Payment Plan
You can find more details and links to online application pages for both plans on the IRS’s payment plan page. This IRS system is available only during specific hours. If you’re not able to apply online, you might still be eligible to pay in installments by completing Form 9465 and mailing it in. You can also apply by phone. Individuals should call 800-829-1040, while Businesses can call 800-829-4933. You can also call the phone number on your bill or notice.
IRS Form 9465 (Credit: IRS/PCMag)
How to File for a Tax Extension
If you’ve secured funding for at least part of what you think you will owe but won’t have your return ready in time, you can file an extension. You just have to submit IRS Form 4868 by April 15, 2025. The hitch? The IRS still expects you to include all or part of what you think you owe, so you still have to find a funding source. With the extension, you have until October 15, 2025, to complete and submit your tax return. You can print and mail the extension form with your payment or submit everything via personal tax preparation software.
Extension interview in FreeTaxUSA (Credit: FreeTaxUSA/PCMag)
You can also submit your payment electronically in any of three ways and indicate you’re filing for an extension. The first is the IRS’s Direct Pay With Bank Account service. If you choose this option, you get a confirmation number and don’t have to file Form 4868. Another option is the Electronic Federal Tax Payment System, which further safeguards any payments you make because it requires three forms of identification. Finally, the IRS also uses third-party payment processors for taxpayers who want to put their payment on a debit or credit card or use digital wallets like PayPal. This method comes with additional processing fees.
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What Penalties Can the IRS Impose If You Don’t Pay Taxes?
There’s a long list of penalties the IRS can assess, depending on how you have erred. The agency sends out notices (letters, through the US Mail) about them. Two you should know about are Failure to Pay and Failure to File.
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Failure to Pay is the less serious of the two. If you file but don’t pay your taxes, the IRS calculates your penalty based on how long your overdue taxes remain unpaid. It asses 0.5% of your unpaid total for each month or partial month until you pay the debt. This penalty can’t exceed 25% of your total unpaid taxes. There is also a penalty if the IRS learns you owe more than you claimed.
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Failure to File is a penalty with a much heftier fine: 5% of your unpaid taxes every month or part of a month your return is late. It, too, can’t exceed 25% of the total of your unpaid taxes.
The IRS also charges interest on penalties for underpayment of taxes, even if you file an extension.
You might be able to reduce or remove your penalties if you “…acted with reasonable cause and in good faith.” The “Penalty Relief for Reasonable Cause” program accepts or rejects taxpayers on a case-by-case basis after considering all the facts. Some examples of valid reasons for not filing or paying on time include:
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An electronic filing or payment that was delayed by system issues
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Fires, other natural disasters, or civil disturbances
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Inability to obtain records
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Serious illness or death
But don’t expect the IRS to waive your penalty for your lack of knowledge, funds, mistakes and oversights, or reliance on an unprepared tax professional.
You can apply for this relief over the phone by calling the number in the upper right corner of your late filing notice. Or you can submit Form 843.
IRS Form 843 (Credit: IRS/PCMag)
Can You Negotiate With the IRS on Taxes?
You do have an option that allows you to pay less than you owe. You can request an Offer in Compromise if you’re unable to pay your tax liability or if “…doing so creates a financial hardship.” The IRS generally approves requests when you make an offer that is the most the IRS could expect to collect from you within a reasonable time. The agency suggests you explore all other possibilities before attempting an Offer in Compromise.
The IRS considers four things before deciding: your ability to pay, asset equity, expenses, and income. You are eligible to apply for the program if you:
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Are an employer who has submitted tax deposits for the current quarter and the past two quarters
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Are not in the process of declaring bankruptcy
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Filed a valid extension for the current year (unless you’re applying for a different year)
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Have filed all of the required tax returns and submitted all quarterly estimated payments
You can complete the Offer In Compromise Pre-Qualifier here. If the IRS rejects your offer, you can appeal the ruling.
What Happens If You Simply Don’t Pay Your Taxes?
You probably already know the answer to this one. If you don’t pay your taxes, you first receive notices about penalties and interest. Then, you might hear from a collection agency. After that, the IRS will eventually start to slap liens on your assets. If you don’t respond, the IRS will attempt to collect by seizing assets like your bank accounts, paychecks, properties, or Social Security payments.
The best solution, of course, is to keep up with your taxes during the year. If you’re a W-2 employee and you had to pay a sizable chunk on your 2025 taxes, change your withholding. If you’re self-employed and get at least some of your income reports via 1099s, use a personal finance application or small business accounting website to track your income and expenses throughout the year so you can estimate and pay your quarterly taxes.
If you start getting notices from the IRS about payments due, communicate promptly. You have plenty of options, and the agency will work with you as long as you show good faith efforts.
About Our Expert
Experience
I write about money. I’ve been reviewing tax software and services as a freelancer for PCMag since 1993. Along the way, I took on reviews of other types of business and personal finance technology. Prior to that, I had spent a few years writing about productivity and entertainment applications for 8-bit personal computers (my first one was a Commodore VIC-20) as a member of the editorial staff at Compute!
After working at Lawson Associates, now Lawson Software, I switched my focus to accounting but learned that personal computer applications were more progressive and interesting to cover than mainframe solutions. So I served as editor of a monthly newsletter that provided support for accountants who were just starting to use PCs. I still ghostwrite monthly how-to columns for accounting professionals. From there, I went on to write articles and reviews for numerous business and financial publications, including Barron’s and Kiplinger’s Personal Finance Magazine.
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