Why You Should File Your Taxes by April 15, Even If You Can't Pay

Q. I will owe taxes this year, but I don’t have the money to pay the bill. What should I do?

A. Even if you don’t have the cash to pay, you should still file your return on time. If not, you’ll end up owing even more, and that won’t be any good. And not filing at all isn’t an option.

As long as you file on time, you won’t face a penalty for filing late, said Joseph Matheson, a certified public accountant with Matheson & Associates in Whippany, N.J..

“Pay as much as you can with your tax return,” he said. “The more you can pay with the return, the less interest and late payment penalty you will incur.”

You can pay online with IRS Direct Pay, which is an electronic payment option available from the Internal Revenue Service, Matheson said. It allows you to schedule payments from your checking or savings account for no charge and you’ll receive an immediate payment confirmation.

Then, pay the rest of your tax as soon as you can.

“If it is possible, get a loan or use a credit card to pay the balance,” Matheson said. “The interest and fees charged by a bank or credit card company may be less than the interest and penalties charged for late payment of tax.”

That can be especially true if you already have a low-interest credit card (here are some of the best) or one with a 0% financing offer.

Matheson said the IRS offers an Online Payment Agreement tool which allows you to ask for an installment agreement.

“You can use a direct debit plan. When you pay with a direct debit plan, you won’t have to write a check each month,” he said. “If you can’t use the IRS.gov tool, you can file Form 9465, Installment Agreement Request instead.”

But whatever your situation, don’t ignore a tax bill.

“The IRS may take collection action if you ignore the bill,” Matheson said. “Contact the IRS or your CPA right away to talk about your options. If you are experiencing a financial hardship, the IRS will work with you.”

Hopefully next year you won’t owe, or you’ll get a tax refund, so review your withholding to make sure you’re not in the same mess next year.