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According to the U.S. Internal Revenue Service data, a little over 14 million Americans owed over $131 billion in back taxes, interest and penalties in 2018. When you complete your tax return and realize that you owe the IRS, what can you do if you can’t pay them back right away? Here’s a list of your best payback options. Be sure to check with the IRS directly on any of these options, as they could change at any time. 

Request Monthly Payments 

The IRS allows you to set up a monthly payment plan, as long as you’ve filed all required tax returns and you meet one of the following criteria: 

• You are an individual who owes $50,000 or less in combined tax, interest and penalties. 

• You are a business that owes $25,000 or less in combined tax, interest and penalties for the current year or last year’s liabilities.  

You can apply for an installment agreement by visiting the IRS website. Please be aware that there may be a fee to set up the installment plan, as well as interest and penalties.  

Request a Short-Term Extension 

If you think you can pay within 120 days, you can request a short-term extension. There is no fee to request an extension, however there is a penalty per month on the unpaid balance. To apply, visit the IRS website.  

Request a Hardship Extension 

You can ask the IRS for leniency if you can prove that by paying your taxes you will bear a tremendous burden by doing so, such as having to sell your home to pay off the debt. 

The IRS offers options for people in hardship situations, including the currently not collectible status. If the IRS decides that you can’t pay any of your debt, it may report your account currently not collectible and may temporarily delay collection. This does not mean that your debt goes away; it just means that the IRS doesn’t believe you can pay it at this time.  

To be considered for a hardship extension, you will need to fill out Form 1127, and include a statement of your assets and liabilities. There are no fees to apply and no penalties, but you will be charged interest. 

Use a Credit Card, But Beware 

If you owe a small amount, you could use a credit card you currently own to pay off the debt, which could delay your payment by a month or so and you could earn rewards points. However, if you find you can’t pay off your credit card in full on time, then you will be subject to your credit card’s annual interest rate.  

If you don’t have a credit card or don’t want to pay interest on a current card, you can apply for a 0% interest intro offer for a different card. If you owe a lot to the IRS, this could be a good option. Just be sure to pay off the credit card balance before the intro rate expires. 

Ask for Your Tax Bill to Be Reduced 

An offer in compromise means that you settle your tax debt for less than what you owe. The IRS will consider your unique facts and circumstances, including income, ability to pay, asset equity and expenses. The IRS normally approves an offer in compromise when the amount offered is believed to be the most it can expect to collect within a reasonable amount of time. This option is rarely granted by the IRS, but you can take a pre-qualifier test. 

When you find out you owe the IRS, review your options carefully and take into consideration your entire financial situation and possible consequences of each of your payback options.