What to Do If You Can’t Pay Your Taxes by April 15: A Guide for Small Business Owners & Self-Employed Individuals

Tax season can be stressful enough—especially if you realize you won’t be able to pay your full tax bill by the April 15th deadline. If you’re a small business owner or self-employed professional, this can feel even more overwhelming. But here’s the good news: the IRS offers several options to help you manage your tax situation and avoid long-term consequences.

As someone currently studying for the Enrolled Agent (EA) exam, I’ve been diving deep into the tax code and relief programs available. Here’s a breakdown of the most helpful solutions you should know about if you can’t pay your tax bill in full.

1. Pay What You Can

Even if you can’t pay the full amount, submit a partial payment by April 15. Doing so helps reduce the penalties and interest that will accumulate over time. The IRS takes your effort into account, and every dollar you pay now lowers your future burden.

2. Short-Term Payment Plan (120 Days or Less)

If you believe you can pay your full tax balance within four months, a short-term payment plan may be a great option. There is no setup fee, and the process can often be completed online. It gives you a little extra breathing room without committing to a long-term contract.

3. Long-Term Installment Agreement

For larger balances or longer timeframes, you can apply for a long-term installment agreement. This allows you to pay off your tax debt through manageable monthly payments over several years. If your total amount owed (including penalties and interest) is under $50,000, you can typically apply online with minimal paperwork.

4. Offer in Compromise (OIC)

If paying your full tax debt would create a financial hardship, you may qualify for an Offer in Compromise, which allows you to settle your debt for less than the full amount owed. This option is based on your income, expenses, assets, and overall financial situation. While not everyone qualifies, it can be a life-changing solution for those who do.

5. Currently Not Collectible (CNC) Status

If you’re going through significant financial hardship and genuinely cannot make any payments, the IRS may place your account in Currently Not Collectible (CNC) status. While interest continues to accrue, the IRS will temporarily pause all collection efforts until your financial situation improves.

Bonus Tip: Filing an Extension Only Delays the Paperwork—Not the Payment

Many people mistakenly believe that filing an extension gives them more time to pay. It doesn’t. An extension gives you more time to file your tax return, but any tax owed is still due by April 15. To avoid penalties and interest, make a payment (even partial) by the deadline.

Final Thoughts

If you’re unsure which option is best for your situation, don’t wait until it becomes a bigger problem. Reach out to a tax professional or Enrolled Agent to help you understand your choices and take the right steps.

Remember: doing something is better than doing nothing. The sooner you act, the more options you’ll have.