Out of more than 143 million taxpayers, you might think the IRS has enough to worry about and will never notice if you pay your taxes late or fail to pay at all.
But no matter how busy the IRS gets during tax season, you will be penalized if you don’t pay taxes. Interest and penalties will begin to accrue on the outstanding amounts when you don’t pay what you owe by the due date.
As time goes on, the IRS may even seize a portion of your wages each pay period until the debt is settled.
If you don’t owe, but rather are expecting a refund, you risk losing the money the government owes you. Taxpayers must file within three years of the return due date, or else they forfeit any cash the IRS owes them. The same rule applies to claim tax credits such as the Earned Income Credit (EIC).
In 2021, the deadline to file your 2020 taxes was May 17. If you haven’t already filed, you should e-file today using an online tax filing program like TurboTax or H&R Block.
Once you determine how much you owe, you can set up a payment plan with the IRS. The service fees for setting up tax payment plans range from $0 to 149 and will include interest on the balance until the payment is paid in full. Plus, there is a non-payment penalty, up to a maximum of 25% of the unpaid tax amount, for paying late.
Learn more about IRS payment plans.
Other options to pay your taxes over time
Since the IRS does charge a service fee and interest to pay your taxes over time, it may be more affordable to use a 0% APR credit card to pay your tax bill. If you use a card with 0% APR, you’ll be able to pay your bill off over time with no interest during an intro period of what’s usually 12 to 20 months. Keep in mind that you do have to pay a one-time ~2% fee when paying your taxes with a credit card.
