What tax payment means and who has to do it
Tax payment is money you send to the federal government (and sometimes your state) based on income you earned during the year. If you work a job, your employer usually takes tax money from each paycheck automatically — that is called withholding. If you are self-employed, own a business, or have income your employer does not withhold from, you send the money yourself on a schedule set by the IRS.
You owe federal income tax if you earned above a certain amount in the tax year. That threshold depends on your age, filing status, and type of income. Most people file taxes once a year (by April 15) and either pay what they still owe or receive a refund if too much was withheld.
State income tax works similarly in most states, though some states have no income tax at all. If you live in a state with income tax, you file a separate state return and pay the state directly.
Key Takeaways
- If your employer withholds taxes, you file once a year to settle what you owe; if you are self-employed, you make quarterly payments to the IRS on a set schedule.
- You can pay taxes online through IRS.gov, by mail, by phone, or through an approved payment processor, and each method has different fees and processing times.
- If you cannot pay in full by the deadline, you can request a payment plan (installment agreement) or ask for more time to file (extension), both of which have fees.
- Unpaid taxes accrue penalties and interest that grow over time, and the IRS can place a lien on your property or garnish your wages if the debt goes unpaid for years.
- If you owe back taxes and cannot pay, the IRS has programs like Offer in Compromise that may settle the debt for less, though you must meet strict income and asset limits.
How to pay taxes you owe
The IRS offers several ways to pay. The fastest and most common is online payment through IRS.gov using the Direct Pay tool (no fee) or an approved payment processor like PayPal or a credit card (fees range from 1.87% to 3.93% depending on the processor). You can also pay by phone by calling the IRS at 1-800-829-1040 and speaking to a representative, or by mail by sending a check or money order with a payment voucher to the address on your tax return.
If you file through a tax preparer or software, many allow you to pay directly from that platform. The payment is usually processed within one to three business days if you pay electronically, or within two to three weeks if you mail a check.
The deadline to pay is the same as the deadline to file: April 15 of the year after you earned the income (or the next business day if April 15 falls on a weekend). If you file an extension, you get more time to file your return, but the payment is still due by April 15 — filing late does not extend the payment deadline.
Payment plans if you cannot pay in full
If you owe taxes but do not have the money by the deadline, you can set up an installment agreement with the IRS. This lets you pay in monthly chunks instead of a lump sum. There are two types: a short-term agreement (120 days or fewer) and a long-term agreement (more than 120 days).
To request an installment agreement, you can apply online through IRS.gov, by phone, or by mail. The IRS charges a setup fee (usually $31 to $225 depending on the method and your income) and interest on the unpaid balance. The interest rate is set quarterly and is currently around 8% per year, though it changes. You also pay a failure-to-pay penalty of 0.5% per month on any unpaid tax.
Once approved, you make monthly payments until the debt is settled. If you miss a payment, the agreement can be terminated and the full amount becomes due immediately. If your financial situation improves, you can pay off the agreement early without penalty.
What happens if you do not pay by the deadline
If you do not pay by April 15 and do not have an installment agreement in place, penalties and interest start accruing immediately. The failure-to-pay penalty is 0.5% of the unpaid tax per month (up to 25% total). Interest compounds daily at a rate set by the IRS each quarter, currently around 8% per year.
The IRS does not immediately take action, but after several months of non-payment, they send notices asking you to pay. If you ignore those notices for about two years, the IRS can file a tax lien against your property — this is a legal claim on your assets that damages your credit and makes it hard to sell property or borrow money. After that, the IRS can pursue wage garnishment, taking money directly from your paycheck, or levy your bank account.
The longer you wait, the larger the debt grows. A $5,000 unpaid tax bill can become $8,000 or more within a few years once penalties and interest are added.
Requesting more time to file and pay
If you need more time, you can file for an extension of time to file using Form 4868. This gives you six additional months (until October 15) to submit your return. You can file for an extension online through IRS.gov, by mail, or through tax software.
An extension to file does not extend the payment deadline. You still owe any taxes by April 15. If you cannot pay by then, you should still file the extension and set up a payment plan to avoid penalties. Filing an extension itself has no fee, but if you owe tax and do not pay by April 15, penalties begin accruing even if your return is not yet filed.
Back taxes and settlement options
If you have unpaid taxes from prior years, you are in back tax status. The debt does not go away — it grows with interest and penalties. The IRS can pursue collection for up to 10 years from the date the tax was assessed, though that period can be extended in certain cases.
If you owe back taxes and cannot pay the full amount, you may be able to settle through an Offer in Compromise. This is an agreement where you pay less than you owe, usually as a lump sum or over a short period. To may have access to, you must show that paying the full amount would create financial hardship. The IRS evaluates your income, expenses, and assets to determine what you can reasonably pay.
An Offer in Compromise is difficult to obtain and takes months to process. You must file Form 656 and include financial statements. The IRS accepts only about 25% of offers submitted. If your offer is rejected, you can appeal or pursue other options like a payment plan or Currently Not Collectible status (which pauses collection while you are in financial hardship, though interest and penalties continue to accrue).
State taxes and local taxes
Most states with income tax follow the same April 15 deadline as federal taxes. You file a separate state return and pay the state directly. Some states allow you to pay online through their tax agency website; others require mail or phone payment. State penalties and interest rates vary by state but work similarly to federal rules — they accrue if you do not pay by the deadline.
A few states have local income taxes in addition to state tax. These are usually collected by your employer through withholding, but if you are self-employed or have income not subject to withholding, you may need to pay the local tax separately. Check your state and local tax agency websites for payment methods and deadlines specific to your location.
Frequently Asked Questions
Can I pay my taxes with a credit card?
Yes, but only through an approved payment processor, and you will pay a fee of 1.87% to 3.93% of the amount. The IRS itself does not accept credit cards directly. Using a credit card to pay taxes can make sense if you earn rewards points that offset the fee, but it means you are borrowing money at credit card interest rates to pay tax debt, which usually costs more than the IRS interest rate.
What if I cannot find my tax return or do not know how much I owe?
Contact the IRS at 1-800-829-1040 or visit your local IRS office. You can also create an account on IRS.gov and view your tax account, which shows what the IRS has on file for you and any balance owed. The IRS can send you a transcript of your return or a notice showing what you owe.
Do I have to pay if I disagree with the amount the IRS says I owe?
You can dispute the amount through the IRS appeals process, but you generally must pay first or set up a payment plan while the dispute is being resolved. If you win the appeal, you receive a refund. If you lose, you owe the full amount plus interest from the original due date.
What happens to my refund if I owe back taxes?
The IRS will automatically apply your refund to any back taxes, penalties, and interest you owe before sending you any money. If you owe more than your refund, the remaining balance is still due. You cannot prevent this offset.
Can the IRS take my Social Security or disability payments?
The IRS can offset federal benefits including Social Security and disability payments, though there are limits. They cannot take the full amount — they must leave you with a minimum monthly amount. If this happens, you will receive a notice explaining the offset and your right to request a review.