The short answer
File your return on time even if you can't pay. The penalty for filing late is about ten times bigger than the penalty for paying late. Then pay what you can and set up an IRS payment plan for the rest. Most people can do that online.
Last reviewed: October 2026
Why filing matters more than paying
The late-filing penalty is generally 5% of the unpaid tax for each month the return is late, up to 25%. The late-payment penalty is generally 0.5% a month. Interest adds up on both. Filing on time, even with no payment, stops the bigger penalty.
Your options, from simplest to most involved
- Pay in full later, within 180 days. A short-term payment plan. Interest and the smaller penalty still apply.
- Monthly payment plan (installment agreement). Most people who owe $50,000 or less can set one up online at IRS.gov. Paying by automatic bank draft keeps the setup cost lowest.
- Penalty relief. If you've had a clean record for the past three years, you may qualify for first-time penalty relief. Reasonable cause, like a serious illness or a disaster, can also help.
- Currently not collectible. If paying anything would leave you unable to cover basic living costs, the IRS can pause collection. Interest still adds up.
- Offer in compromise. Settling for less than you owe. Only a small share of people qualify. Be wary of anyone who promises one.
Watch out for "pennies on the dollar" ads
Companies that promise to wipe out your tax debt often charge big fees up front for things you can do yourself, like a payment plan. The IRS's own tools are free or low-cost.
Don't ignore the letters
IRS balance-due letters get more serious over time. Answering early keeps your options open. See I got a letter from the IRS.
Official source: IRS: Payment plans (installment agreements).
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Disclaimer: This page is general information, not tax advice. Every situation is different, and tax rules change. Reading this page doesn't make you a client.