Can't pay your taxes? Here are your options

The deadline to file your 2023 taxes is April 15, 2024. While the majority of Americans will get a refund, the percentage who will owe the IRS has been steadily rising, according to data from Civic Science, from 39% in 2021 to 43% in 2023.

Fortunately, if you can't afford to pay your tax bill you have several options, from IRS-sponsored plans to personal loans.

Here's what you need to know about getting help to pay your taxes on time.

If you don't have the cash to pay Uncle Sam right away, the IRS has installment plans that can help. There's no getting around interest and penalties, but you'll avoid more severe consequences.

The IRS's short-term payment plan gives taxpayers up to 180 days to settle their debt. It does carry a failure-to-pay penalty of 0.5% a month and interest will accrue on what you owe until the balance reaches 25% of the total due.

You can still get on a payment plan if you're not going to have the funds within six months, but there are additional fees. And, as with a short-term plan, you'll be hit with a 0.5% failure-to-pay penalty.

If you register for automatic monthly withdrawals online, there is a $31 set-up fee. If you set up direct debit over the phone, through the mail or in person, however, the fee is $107. You can opt to make regular payments yourself, but the fee is $130 if you register online or $235 over the phone, through the mail or in person.

With a long-term payment plan, you can typically set how much your monthly payment is but you must choose an amount that enables you to clear your debt in 72 months.

If you don't think you'll have the money to pay your tax bill, you can apply for an offer in compromise (OIC), a request to settle your tax bill for less than the amount owed.

The IRS considers several factors when reviewing OICs — including your income, expenses and ability to pay — but approvals are rare: Only about a third of the 36,000 OICs submitted in 2022 were accepted.

If your OIC is accepted, you can choose to pay it in one lump sum within five months or make periodic payments over 24 months.

Paying your taxes using a credit card sidesteps penalties and interest from the IRS, but could open you up to a higher APR and put you even deeper in debt. One option is applying for a credit card with a 0% APR introductory offer. Some have no interest for more than a year on purchases, which would give you breathing room to settle the debt.

This strategy is only advisable if you believe you can pay off the balance before the introductory period expires. Otherwise, you'll be hit with hefty interest payments.

The Wells Fargo Reflect® credit card has an introductory 0% APR offer on both purchases and balance transfers that lasts 21 months (18.24%, 24.74% or 29.99% variable APR thereafter), giving qualified users nearly two years to pay off their tax bill interest-free.

The Amex EveryDay® card's 0% APR rate lasts for only 15 months (then 18.24% to 29.24%) but cardholders get a welcome bonus of 10,000 points if they spend $2,000 in the first six months after opening the card.

If you pay by credit card, the IRS does charge a service fee that varies by card type and payment amount.

If you don't have great credit, it may be easier to secure a personal loan than to get approved for a 0% APR credit card. Before you apply for a loan, however, compare the rate and fees with what you would pay through an IRS installment plan so you know if you're making the best financial decision. Be sure to consider how long it will take you to settle your tax bill.

Avant Personal Loans is a great option for quick funds if you have poor credit, with approved applicants able to get up to $35,000. You'll have 12 to 60 months to repay the loan, with an APR that ranges from 9.95% to 35.99%.

You only need a credit score of 300 to be considered for a loan by Upstart. The online lending platform offers loans of up to $50,000, with repayment terms of between 36 and 60 months

If you own your residence, you can leverage your home equity to get cash with a home equity line of credit (HELOC), often referred to as a "second mortgage."

Interest rates on HELOC loans are usually lower than for credit cards and personal loans. But they typically start at $10,000, so only consider a HELOC loan if your tax bill is at least five figures.

If you can't afford to pay your taxes, there are ways to finance payments over a longer period. Compare IRS payment plans to zero-interest credit cards, personal loans and other strategies to see which makes the most financial sense.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of tax products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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