How to pay off tax debt

Image of a woman and child planting a tree simbolizing the financial growth after paying off debt

September 3, 2025

5 min read

April 15 is the deadline for filing income tax returns, unless you filed an extension, thenit’s October 15. If you find you owe money to the government, take heart: There areseveral ways to arrange payment or get help with your tax debt. In this article we’ll lookat strategies that can ease tax stress.

Here’s what we’re going to cover:

Always file your tax returns (or extension) on time
Apply for a payment plan
Ask for a collection delay
Request that the IRS reduce how much you owe
Contact your state’s tax agency
Increase your withholding
Get more help
Enjoying freedom from tax debt

Key takeaways

It’s important to file your tax returns on time every year to avoid penalties.
The IRS provides several options for paying off income taxes, such as installmentagreements and Offers in Compromise.
If you decide to get professional tax help, be sure to work with a reputable company.

Always file your tax returns (or extension) on time

Federal and state income tax returns are due each year by April 15. Even if you can’t payall the money you owe right now, be sure to file your returns on time and pay as muchas possible. If you need more time to complete your return, request a filing extension to avoid owing a 5 percent penalty each month for failure to file.

Never ignore a notice from the IRS or your state’s tax agency. If you don’t understandthe notice, call the phone number listed and ask to have it explained. You can also askwhat payment options are available.

But don’t give out personal information unless you’re sure who you’re dealing with. TheIRS will nearly always contact you by letter, not email or phone. If you feel any doubt,check IRS.gov to verify that the message is legitimate.

Watch out for tax scams! We repeat: Check IRS.gov to verify that anymessage from the IRS is legitimate by searching on IRS.gov. You can search byCorrespondence (CP) or Letter (LTR) number on the right corner of your letter. Do notsend personal information or payments to anyone until you’re sure it’s a legitimate message.

Apply for a payment plan

The IRS may allow you to pay off your tax debt over a period of time. You can apply for a short-term payment plan to get an additional six months or a monthly install mentagreement for longer periods. There may be a fee for this service. With either of thesearrangements, you will continue to be charged interest until your total tax bill is paid.

Ask for a collection delay

If you’re temporarily short of cash, you may want to request a collection delay from the IRS. These delays usually last 120 to 180 days (four to six months). This gives you more time to pay your taxes, but penalties and interest will still be added to what you owe.

Request that the IRS reduce how much you owe

In some cases of extreme financial hardship, the IRS will reduce the tax you owe, called an Offer in Compromise. You must apply and pay a fee to get an Offer in Compromise. Keep in mind, however, that only about one in three of the people who request this service will have their taxes reduced. The rest of the applications are denied.

Contact your state’s tax agency

If you also owe state income taxes, contact the appropriate agency in your state to learn about options for paying off your debt. The good news is that state income taxes are usually much less than federal income taxes.

There are no state income taxes in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, or Wyoming. Washington State taxes capital gains, but not other income.

Increase your withholding

Is your withholding rate high enough to cover your income taxes each year? If not, you may want to increase the amount withheld from your paychecks. File a new W-4 form with your employer, and choose extra withholding. This can be helpful if you work more than one job or have additional sources of income.

If you’re self-employed, you can increase your estimated payments to the IRS and the state.

Get more help

Tax law is complex, and owing back taxes can be stressful. The Taxpayer Advocate Service, an independent organization within the IRS, provides a range of resources for tax issues at no charge. You may also be able to get help with tax return preparation from other free services such as the Volunteer Income Tax Assistance program (VITA) or Tax Counseling for the Elderly (TCE).

Another option is to hire a reputable tax consultant. These professionals can help you prepare returns and advise you how to avoid large tax bills. It’s their job to make sure you take all the tax deductions and credits available to you. Watch out for scams, however, especially businesses that promise to lower your tax bill but want payment in advance.

Enjoying freedom from tax debt

Tax debt is a common problem, but fortunately there are simple strategies for dealing with it. Be sure to file your tax returns on time, then consult with the IRS to find the best payment solution. Reach out for help when you need it.

Don’t lose sight of your goal, and look forward to the day when you can be free of tax debt.

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