The deadline to file your 2023 taxes is April 15, 2024. While the majority of Americans will get a refund, the percentage who will owe the IRS has been steadily rising, according to data from Civic Science, from 39% in 2021 to 43% in 2023.
Fortunately, if you can't afford to pay your tax bill you have several options, from IRS-sponsored plans to personal loans.
Here's what you need to know about getting help to pay your taxes on time.
What We'll Cover
- Enroll in an IRS tax payment plans
- Apply for an offer in compromise
- Pay with a credit card
- Pay with a personal loan
- Borrow against your home equity
- Bottom line
Enroll in an IRS installment plan
If you don't have the cash to pay Uncle Sam right away, the IRS has installment plans that can help. There's no getting around interest and penalties, but you'll avoid more severe consequences.
The IRS's short-term payment plan gives taxpayers up to 180 days to settle their debt. It does carry a failure-to-pay penalty of 0.5% a month and interest will accrue on what you owe until the balance reaches 25% of the total due.
You can still get on a payment plan if you're not going to have the funds within six months, but there are additional fees. And, as with a short-term plan, you'll be hit with a 0.5% failure-to-pay penalty.
If you register for automatic monthly withdrawals online, there is a $31 set-up fee. If you set up direct debit over the phone, through the mail or in person, however, the fee is $107. You can opt to make regular payments yourself, but the fee is $130 if you register online or $235 over the phone, through the mail or in person.
With a long-term payment plan, you can typically set how much your monthly payment is but you must choose an amount that enables you to clear your debt in 72 months.
Learn more: What happens if you don't pay your taxes on time?
Apply for an offer in compromise
If you don't think you'll have the money to pay your tax bill, you can apply for an offer in compromise (OIC), a request to settle your tax bill for less than the amount owed.
The IRS considers several factors when reviewing OICs — including your income, expenses and ability to pay — but approvals are rare: Only about a third of the 36,000 OICs submitted in 2022 were accepted.
If your OIC is accepted, you can choose to pay it in one lump sum within five months or make periodic payments over 24 months.
Pay with a credit card
Paying your taxes using a credit card sidesteps penalties and interest from the IRS, but could open you up to a higher APR and put you even deeper in debt. One option is applying for a credit card with a 0% APR introductory offer. Some have no interest for more than a year on purchases, which would give you breathing room to settle the debt.
This strategy is only advisable if you believe you can pay off the balance before the introductory period expires. Otherwise, you'll be hit with hefty interest payments.
The Wells Fargo Reflect® credit card has an introductory 0% APR offer on both purchases and balance transfers that lasts 21 months (18.24%,24.74%or29.99% variable APRthereafter), giving qualified users nearly two years to pay off their tax bill interest-free.
Wells Fargo Reflect® Card
Rewards
None
Welcome bonus
None
Annual fee
$0
Intro APR
0% intro APR for 21 months from account opening on purchases and qualifying balance transfers.
Regular APR
18.24%, 24.74%, or 29.99% Variable APR on purchases and balance transfers
Balance transfer fee
5%, min: $5
Foreign transaction fee
3%
Credit needed
Excellent/Good
See rates and fees. Terms apply.
The Amex EveryDay® card's 0% APR rate lasts for only 15 months (then 18.24%to29.24%) but cardholders get a welcome bonus of 10,000 points if they spend $2,000 in the first six months after opening the card.
Amex EveryDay® Credit Card
Information about the Amex EveryDay® Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.
Rewards
2X Membership Rewards® points at U.S. supermarkets on up to $6,000 per year in purchases (then 1X), 1X Membership Rewards® points per dollar spent on all other purchases
Welcome bonus
Earn 10,000 Membership Rewards® points after you make $2,000 in purchases in your first 6 months of card membership
Annual fee
$0
Intro APR
0% for the first 15 months on purchases and balance transfers from the date of account opening
Regular APR
18.24%to29.24% variable
Balance transfer fee
N/A
Foreign transaction fee
2.7%
Credit needed
Excellent/Good
See rates and fees,terms apply.
If you pay by credit card, the IRS does charge a service fee that varies by card type and payment amount.
Pay with a personal loan
If you don't have great credit, it may be easier to secure a personal loan than to get approved for a 0% APR credit card. Before you apply for a loan, however, compare the rate and fees with what you would pay through an IRS installment plan so you know if you're making the best financial decision. Be sure to consider how long it will take you to settle your tax bill.
Avant Personal Loans is a great option for quick funds if you have poor credit, with approved applicants able to get up to $35,000. You'll have 12 to 60 months to repay the loan, with an APR that ranges from 9.95% to 35.99%.
Avant Personal Loans
Annual Percentage Rate (APR)
9.95% to 35.99%
Loan purpose
Debt consolidation, major expenses, emergency costs, home improvements
Loan amounts
$2,000 to $35,000
Terms
24 to 60 months
Credit needed
Poor/Fair
Origination fee
Administration fee up to 9.99%
Early payoff penalty
None
Late fee
Up to $25 per late payment after 10-day grace period
Terms apply.
Click here to see if you prequalify for a personal loan offer.
You only need a credit score of 300 to be considered for a loan by Upstart. The online lending platform offers loans of up to $50,000, with repayment terms of between 36 and 60 months
Upstart Personal Loans
Annual Percentage Rate (APR)
7.8% - 35.99%
Loan purpose
Debt consolidation, credit card refinancing, wedding, moving or medical
Loan amounts
$1,000 to $50,000
Terms
36 and 60 months
Credit needed
FICO or Vantage score of 600 (but will accept applicants whose credit history is so insufficient they don't have a credit score)
Origination fee
0% to 12% of the target amount
Early payoff penalty
None
Late fee
The greater of 5% of monthly pastdue amount or $15
Terms apply.
Borrow against your home equity
If you own your residence, you can leverage your home equity to get cash with a home equity line of credit (HELOC), often referred to as a "second mortgage."
Interest rates on HELOC loans are usually lower than for credit cards and personal loans. But they typically start at $10,000, so only consider a HELOC loan if your tax bill is at least five figures.
Subscribe to the CNBC Select Newsletter!
Money matters —so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox.Sign up here.
Bottom line
If you can't afford to pay your taxes, there are ways to finance payments over a longer period. Compare IRS payment plans to zero-interest credit cards, personal loans and other strategies to see which makes the most financial sense.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of tax products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Catch up on CNBC Select's in-depth coverage ofcredit cards,bankingandmoney, and follow us onTikTok,Facebook,InstagramandTwitterto stay up to date.
Read more
Best tax software of 2024: File fast and accurately, plus get your maximum refund
Can you pay taxes with a credit card — and should you?
How to check the status of your tax refund
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
