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What should I do if I can't pay my taxes?

If you can't pay your taxes, you aren't out of luck. In fact, this happens to many people every year in the United States. When you can't pay on time, the Internal Revenue Service (IRS) normally allows you to set up a payment plan. This plan works differently depending on how much you owe, but generally speaking, you can pay the debt in installments.

It's vital that you take steps to make arrangements as soon as you can. If you're proactive and acknowledge that you have debts that you owe, then the IRS will look more kindly on you. You do need to file an income tax return regardless of whether or not you can pay. You'll still owe taxes, even if you don't file your income tax return.

Another thing to keep in mind is that the IRS has the right to charge you penalties if you file your taxes late. You may also be charged interest for each day your taxes go unpaid. For that reason, it's a good idea to pay off the debt owed as quickly as possible.

For your installments, it's best to decide how much you can pay and to pay as much as possible each month until the bill is resolved. Make sure you choose an amount you're able to pay every month regardless of changes in your income. It's worth considering borrowing money to get your taxes paid, because the penalties and interest charged by the IRS is likely to be higher than what you'd pay for a personal loan or to borrow cash from a friend or loved one.

Source: Internal Revenue Service, "I Can't Pay My Taxes," accessed May 02, 2018

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