Can I pay my federal income taxes late?
It’s not always possible to pay your taxes on time. Unfortunately, the IRS does not provide for extensions of time to pay income tax late. Your extension to file your return late will not extend the deadline to pay any balance owed. You will still need to pay at least 90% of your tax bill by April 16th to avoid penalties. The penalty for not paying your income tax bill starts at ½% per month, and can increase to 1% per month.
Options for Paying Your Income Taxes Late
If you don’t have enough cash to pay your tax bill, don’t panic; there are many others out there in the same boat. You will not go to jail. If you can’t pay the full amount owed, you can limit penalty and interest charges by filing your return on time and pay as much as you can towards the balance. Penalties are calculated every month you are late. The penalty for not filing at all can reach up to 25%, which is worse than the ½-1% penalty for not paying your taxes after you file.
Getting Help with Paying Your Taxes
A better course may be to ask a friend or relative for the money, or if you have any equity in your home, tap into an equity home loan. The interest is tax deductible on this type of loan. Another option for paying your taxes, if you qualify, is to set up a monthly payment plan with the IRS by filing Form 9465. You would still pay penalties and interest on the amount owed as well as a fee for an installment agreement.
In some cases, it would save you money overall to borrow the money and pay back your lender. This also avoids an IRS lien on your property. This is something the IRS does when you enter into an installment agreement with them.
Paying Your IRS Tax Bill
The IRS offers many ways to pay your tax bill. You can settle your tax bill by credit card, electronic funds transfer, check, money order, or cashier’s check. For questions about penalties about paying your income taxes late, or with assistance in settling your income tax bill, contact a tax attorney.