It is not unusual for someone to file their income tax return and realize that they have a balance due. What happens though if you owe the IRS but can’t pay the tax now?
Thankfully the IRS does not come and arrest you if you can’t pay all your tax immediately. However, taxes not paid by the due date could result in penalties and interest.
Don’t panic because there are options available to you. If you owe less than $100,000 and can pay within 120 days the IRS will allow you to set up a short-term payment plan online. You can extend the time to pay what is owed online if the amount due is less than $50,000.
The benefit of setting up an installment agreement is that it prevents the IRS from levying your assets. If you owe tax and can’t pay now don’t bury your head in the sand. There are options available to you.
NOTE: To help those who may have been affected by COVID-19 the short-term payment term has been extended to 180 days. The allowed amount owed without having to reveal your financial records has also been increased to $250,000.