How to Pay Taxes (When You Don’t Have Money)

What to do when you need to pay taxes, but you don’t have the necessary funds available? Well, you can join the estimated 20% of Americans who admit to cheating on their federal and state returns. That is, if you’re okay with the consequences—like having the government seize your home, pension plan, business, and any other assets owned in your name.

Instead, settle IRS debt the honest way by dealing with your situation head-on. Keep reading to learn how to pay taxes even when you don’t have two dimes to rub together.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• patience
• determination

1. Your first option to pay taxes when money is so tight that it’s nonexistent is to seek out financial assistance. Start by asking family members and friends who are well off and can afford to help you out. See the Resources area on this page for advice on how to borrow money without regret.
   
   If asking friends and family members for money is not an option, inquire about getting a loan from local financial institutions. This is when being an active member of a bank or credit union comes in handy.

2. Does getting a loan to pay taxes seem near impossible? You can negotiate a payment plan with the government to settle IRS debt. Form 9465 will get you started. Be advised, however, that you will need to pay interest and penalty charges along with your payments.

3. You can choose to settle IRS debt by offering to give a lesser amount. (Really!) Sometimes the government with make a deal with someone because they know it’s highly unlikely that person will ever be able to pay the full amount owed. Fill out Form 656 if this sounds like a feasible way to pay taxes.

4. Another option to pay taxes is to ask the government for more time before the bill start pouring in. If you are jobless or have very low income, your payment plan can be delayed. This will give you more time to gain your financial footing again, but you’ll continue to be charged interest and penalties during this temporary collections hold.

5. You could file Chapter 13 bankruptcy to pay taxes. This option will have you making manageable payments to the government. Chapter 13 bankruptcy appeals to individuals who want to keep non-exempt properties and can afford to pay back the government within 5 years.

6. You may want to file a Chapter 7 bankruptcy to pay taxes if you’re looking to wipe the slate clean. This option is good for those who desperately want to get rid of major outstanding bills and to settle IRS debt. Note that not all government bills owed can be dissolved with Chapter 13 bankruptcy.

Resources

• How to Borrow Money from a Friend or Family Member without Regret

[jrosengarten]

on 6/20/2009 Great advice. I had to set up a payment plan this year for my 2008 taxes. People should never ignore the IRS even when they don't have an extra dime to pay them

[Wasatch]

on 6/13/2009 I often have this problem paying taxes as self employed and having income that varies widely every month. Good article.

[bar10dr98]

on 2/16/2009 Great info on paying taxes when you don't have money, thanks!

[krazigirl79]

on 2/14/2009 Thanks for the article- I just found out I owe a lot of money in taxes and am dreading paying them- but I'd rather pay them than suffer the consequences.