You might have a sinking feeling when realizing you owe Uncle Sam more money. Fortunately, the IRS offers a few ways to help pay taxes without financial hardship.
Pay by the filing deadline to avoid penalties and interest. If you file before the deadline, you don't have to pay the IRS at the same time. Simply schedule an electronic payment for any time by the April 15th deadline during the Filing steps in TaxAct. One advantage of filing early if you owe taxes is that you'll have time to save up the amount owed.
Use your state refund. If you live in a state with income taxes and are receiving a refund, consider using that money to pay part or all of your federal taxes owed. It typically takes longer for states to issue refunds; but, if you receive the money before the IRS filing deadline, you could use it to pay your taxes owed.
Ask for more time. It never hurts to ask. Occasionally, the IRS grants taxpayers an additional amount of time to pay taxes. To request more time, complete the Online Payment Agreement application at www.irs.gov. You may also call the IRS directly at 1-800-829-1040.
Make a credit card payment.* If you need a couple of extra weeks past the filing deadline to save for the taxes owed, consider scheduling a credit card payment for April 15. This will give you until your next credit card statement date to pay for your tax bill.
*Keep in mind that if you do not pay your credit card in full, the interest you pay on the balance could be more expensive than other payment options.
What if I'm unable to pay the amount owed by the filing deadline?
First, pay as much as you possibly can to help minimize the penalties and interest.
If you cannot pay the remaining balance, set up an Installment Agreement to make monthly payments. TaxAct can help you complete Form 9465 – Installment Agreement Request to be filed with your return. An installment agreement should be considered as a last resort, especially if your only other option is to pay with a credit card and won't be able to pay the balance in full.
The IRS charges additional fees for installment agreements, ranging from $43 to $105 depending on the amount owed and your income.
If you owe money to the IRS, you have several options for footing the bill. If you file early in the season, you have some time to decide how and when you'll pay based on your financial situation.
Looking ahead, you may want to consider adjusting how much federal tax is withheld from your paychecks in order to help avoid paying tax on your return next year. TaxAct can help you complete a new Form W-4 that you can give your employer.
January 1 — Everyone
Federal Holiday (New Year's Day) Details
January 10 — Employees who work for tips
If you received $20 or more in tips during December, report them to your employer Details
January 15 — Individuals
Make a payment of your estimated tax for 2018 if you did not pay your income tax for the year through withholding (or did not pay in enough tax that way). Use Form 1040-ES Details
January 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in December 2018
January 15 — Farmers & fishermen
Pay your estimated tax for 2018 using Form 1040-ES Details
January 21 — Everyone
Federal Holiday (Martin Luther King, Jr. Day) Details
January 31 — All Employers
Give your employees their copies of Form W2 for 2018. If an employee agreed to receive Form W2 electronically, have it posted on a website and notify the employee of the posting.
January 31 — Individuals who must make estimated tax payments
If you did not pay your last installment of estimated tax by January 15, you may choose (but are not required) to file your income tax return (Form 1040) for 2017 by January 31. Filing your return and paying any tax due by January 31 prevents any penalty for late payment of the last installment. If you cannot file and pay your tax by January 31, file and pay your tax by April 15.
January 31 — Payers of gambling winnings
If you either paid reportable gambling winnings or withheld income tax from gambling winnings, give the winners their copies of Form W2G.
January 31 — Social Security, Medicare, and withheld income tax
File Form 941 for the fourth quarter of 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter timely, properly, and in full, you have until 02-10 to file the return.
January 31 — Certain small employers
File Form 944 to report social security and Medicare taxes and withheld income tax for 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is $2,500 or more for 2018 but less than $2,500 for the fourth quarter, deposit any undeposited tax or pay it in full with a timely filed return. If you deposited the tax for the year timely, properly, and in full, you have until February 10 to file the return.
January 31 — Farm employers
File Form 943 to report social security and Medicare taxes and withheld income tax for 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year timely, properly, and in full, you have until February 10 to file the return.
January 31 — Federal unemployment tax
File Form 940 for 2018. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it is more than $500, you must deposit it. However, if you deposited the tax for the year timely, properly, and in full, you have until February 10 to file the return.
January 31 — All businesses
Give annual information statements to recipients of certain payments you made during 2018 Details