Your income taxes are due on April 18. What should you do if you can’t pay what you owe?
File your tax return
First and foremost, even if you can’t pay, you should file your tax return on time. The penalties for not filing a return are severe: 5 percent per month on the amount you owe, to a maximum of 25 percent reached after five months.
This is in addition to the interest the Internal Revenue Service charges for paying your taxes late. Filing your return — even if you can’t pay what you owe — will at least avoid this penalty.
Borrow the money
The interest rate on a loan or credit card may be lower than the combination of penalties and interest imposed by the IRS. As a result, it could be cheaper to borrow money or use your credit card to pay what you owe.