Q: What happens if I owe taxes at the end of the year and can’t pay?

A: If you can’t pay your tax bill in full, don’t panic– the IRS offers options to help. These programs allow taxpayers facing financial hardship to manage their payments in a way that works for them, with reasonable interest rates applied to unpaid balances.  

Your Four Main Options:

• Installment Plan– Pay over time (up to 72 months) if you owe $50,000 or less. For debts over $50,000, installment plans are still possible but require additional documentation and approval.
• Extension to Pay– Get up to six months to pay your taxes in full if you qualify.
• Offer in Compromise (OIC) – Settle your tax debt for less than what you owe, but approval is difficult.
• Currently Not Collectible (CNC) – The IRS may pause collection efforts if you can’t afford any payments; however, interest and penalties will continue to accrue during this period. 

Bottom Line: If you can’t pay your taxes, taking one of these IRS-approved actions is almost always better than doing nothing. Similar programs are available for Massachusetts state taxes. Consider applying for a payment plan or extension first, and if you believe you qualify for OIC or CNC, consult a tax professional for guidance.

Have tax questions? I’d be happy to help! I’m Vincent Hicks, CPA, based in Somerville with over 20 years of experience. Feel free to email me at vhicksconnect@gmail.com or call (859) 553-0788.

Disclaimer: This column provides general tax information and should not be considered tax or legal advice. Tax laws change frequently, and individual circumstances vary. For personalized guidance, consult a tax professional.