I’m a Tax Advisor: Here Are 7 Steps To Take If You Can’t Pay Your Tax Bill
You figured you’d have a hefty tax bill this year. But before your accountant turned to you, face drained of color, you didn’t know exactly how bad it was going to be. And it’s bad. So bad that you’re not sure how you’re going to pay what you owe.
Calm down. Breathe into a paper bag if you need to. You’re not without hope.
MoneyLion connected with Daniel Roccanti, CPA, an advisor at James Moore & Co., to break down the steps you should take if you can’t pay your tax bill in full.
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“Not being able to pay your tax bill is more common than most people think — and it’s manageable if you take the right steps early,” he said. “The biggest mistake I see is inaction. The IRS is far more flexible when you’re proactive.”
1. File Your Return — Even if You Can’t Pay
If you can’t pay your tax bill, does it even make sense to file? Roccanti says yes. In fact, filing on time is one of the most important moves you can make if you’re short on cash.
“The failure-to-file penalty is significantly higher than the failure-to-pay penalty,” he said. “Filing preserves your options and limits additional costs.”
In other words: Even if you owe money you don’t have, filing your return stops the steepest penalties from piling up and keeps you in better standing with the IRS.
2. Understand What You Actually Owe
Roccanti understands that seeing the numbers after that dollar sign could cause your cortisol levels to spike. But before you panic, Roccanti wants you to get clarity about what you actually owe, and whether that number is even correct.
“Review your return, confirm balances and make sure nothing was missed — credits, deductions or even prior payments,” he said. “I’ve seen situations where the liability was overstated simply due to incomplete information.”
3. Pay What You Can Immediately
Do you feel overwhelmed by the thought of paying such a large sum right away? Roccanti says you don’t have to pay it all at once to make progress. Even partial payments reduce penalties and interest.
“The IRS calculates these based on your outstanding balance, so every dollar paid upfront helps,” he said.
4. Set Up a Payment Plan
Despite popular belief, the IRS isn’t out to get you. It recognizes that many taxpayers can’t pay large sums in one shot and offers installment agreements that allow you to pay over time.
“For many taxpayers, this is the simplest path forward,” Roccanti said. “The key is choosing a payment structure that’s realistic based on your cash flow — not overly aggressive.”
A payment plan won’t eliminate interest entirely, but it can reduce penalties and bring predictability back to your finances.
5. Evaluate Other Relief Options
Depending on your situation, Roccanti says you may qualify for additional relief, including an offer in compromise — which allows some taxpayers to settle for less than they owe — or temporary hardship status, known as “currently not collectible.”
“These require detailed financial disclosures," he said. "But they can significantly reduce or delay what you owe.”
Not everyone qualifies, but they’re worth exploring if your financial situation is truly strained.
6. Consider the State and International Layer
Here’s a reminder you probably won’t love: Federal taxes aren’t your only obligations. State tax agencies may have their own rules and timelines. And if you earn money from international sources, such as working with overseas clients, tax treaties and foreign tax credits can add another layer of complexity.
“I’ve worked with clients who were effectively taxed twice on the same income before applying the correct treaty position or foreign tax credit,” Roccanti said. “Understanding how different jurisdictions interact is critical to making sure you’re not overpaying.”
7. Get Ahead of the Next Year
Roccanti doesn’t just want you to fix the current problem. He wants to help make sure you don’t end up here again.
His advice?
“Adjust withholding, revisit estimated payments and align your tax strategy with how your income is actually earned,” he said.
The Bottom Line
According to Roccanti, tax problems rarely become serious because of the initial balance. They become serious when people ignore them.
“Whether it’s a straightforward payment plan or a more complex situation involving multiple jurisdictions, the earlier you act, the more options you have,” he said. “The goal isn’t just to resolve the current bill — it’s to put a structure in place so you’re not in the same position next year.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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