Associated Press, by Cora Lewis
NEW YORK (AP) – Even if you know or doubt you won’t be able to pay the taxes you owed this tax season, you will still need to return that information or submit it for an extension. That’s the best advice that tax experts want you to know.
“The IRS wants to work with you,” said Tom Osaben, director of tax content and government relations for the National Association of Tax Professionals. “But if you’re asking for some help from the IRS, they need to know something about you. So the first thing is to submit that return. The number one takeaway is not a reason not to submit money.”
If you do not submit a return or request an extension, interest and penalties will begin to arise immediately. These costs can be mostly avoided if you share information about your situation with the IRS in a timely manner. Submitting a return without paying the full amount is better than not submitting it.
To be clear, if you don’t pay all the taxes you’ll have to pay by the April 15th application deadline, you’ll be charged interest even if you’re allowed to extend in October, but that interest will be more manageable than the fees you add when you don’t pay taxes.
“The worst case scenario is that you don’t submit and you’ll be responsible for the penalty later,” said Emily Divito, a nonprofit groundwork collaborative and former senior economic policy advisor to former US financial advisor. “That’s not good for everyone, but there’s an opportunity to go on a payment plan for an extension.”
What should you know about this:
What happens if I don’t pay taxes?
In addition to interest and penalties, the IRS can ultimately decorate your wages, place a lien on your property, or even hold a passport. However, these results can be avoided if you apply for an extension or return your financial information. Even if you don’t have the money to pay in full by April 15th, you’ll pay just a little bit when you submit it.
Are there any free tools that can help you manage your extension or payment plan creation?
yes. Volunteer Income Tax Support (VITA) sites across the country have volunteers who can help you submit returns or arrange for free extensions. These volunteers can help you set up a payment plan for installments up to 72 months to repay your taxes. IRS direct file programs are also freely available.
“The question marks when you click a button and make a payment can be intimidating, but taxpayers want to make sure you get the money you owed,” says Divito. “Most taxpayers – certainly most labor taxpayers – get their money back. But many tax credit features only get the refund if you file your taxes in the first place.”
Are there any other possible outcomes?
If you experience an unusual difficulty and share it with the IRS, the IRS can sometimes put your account in a “currently uncollectable” status. To do that, you will share information about your income and cost of living, and the IRS will decide whether you will qualify or not.
“Let’s say you’re sick, you lose your job and have serious medical costs. You have all the bad luck, things happen outside of control and you need some relief,” says O’Saben. “The IRS can then put you in an irrecoverable status. But all this requires conversation and communication. No one wants to admit that they have financial problems, but the IRS will work with you if you do.”
There are also rare circumstances in which the IRS resolves tax liabilities less than what is known as “offers of compromise.” VITA tax professionals can also help you check if you are qualified. Alternatively, you can use the free IRS tools online.
I didn’t file any taxes last year. What now?
that’s ok. Get started now.
“I’ve been taxing for over 35 years,” Osaben said. “The biggest reason people don’t submit is that they feel they may owe it — that may be wrong — and they don’t want to face it. But it’s not a matter of disappearing. So tell the IRS the truth about the situation.
This is reflected by California CPA and tax expert Mikros Ringbauer.
“It’s totally fine,” he said. “The IRS deals with all taxpayers. They’ve dealt with this before. There’s nothing they haven’t seen.”
The Associated Press is supported by the Charles Schwab Foundation for education and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
Original issue: March 28, 2025, 2:43pm EDT
