Updated July 12, 2020
One in five U.S. taxpayers could owe the IRS money this year. If you can’t pay on the 15th, take a deep breath — there are things you can do.
Even if you can’t afford to pay your taxes, it is imperative that you still file a timely return and make arrangements to pay what you owe. Failing to do so will result in penalties and interest.
However, don’t panic. You should contact the IRS to discuss your payment options at 800-829-1040.
So, if you owe taxes, how long do you have to pay? The agency may provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise, or by temporarily delaying collection by reporting your account as currently not collectible until you can pay.
In some cases, the agency may be able to waive penalties. However, the IRS is unable to waive interest charges which accrue on unpaid tax bills.
Remember, even if you file an extension, any tax owed is due July 15th, regardless of when you file the return, and interest will accrue from this date.
A common question from our clients is: Why do I owe so much in taxes?
Changes in the tax tables have had a significant impact on taxes withheld from paychecks. If you don’t want to owe again next year, you can take steps to avoid this unpleasant situation.
If you are an employee who receives a W-2, go to your payroll department as soon as possible and submit a new W-4 form. It would help if you made adjustments to have more tax withheld from your paycheck. You may need to ask your accountant or tax preparer for assistance.
You can also read this article to help to understand the new W-4.
If you are self-employed, talk to your accountant about increasing your estimated quarterly payments. Your goal should be to make sure you’re not having too much withheld, but at least enough to cover your taxes.