If I Owe Money on Taxes, When Is It Due?
Understand your federal tax payment obligations. Learn key deadlines, accepted payment methods, and solutions for managing payment challenges.
When you discover you owe money on your taxes, understanding the payment deadline is important for compliance. Tax obligations can arise from various income sources, and knowing when and how to fulfill these responsibilities helps manage your financial situation effectively. This article clarifies the standard federal tax payment due dates and outlines available options for remitting payments or addressing situations where immediate payment is not feasible.
Understanding the Standard Payment Due Date
For most individual taxpayers, the standard federal income tax payment due date is April 15th of each year. This deadline applies to the tax owed for the previous calendar year. If April 15th falls on a weekend or a legal holiday, the due date automatically shifts to the next business day.
Filing an extension for your tax return does not extend the time to pay any taxes owed. An extension provides additional time to submit your tax forms, usually until October 15th, but payment is still due by the original April 15th deadline. Unpaid balances after this date may incur penalties and interest. While state income tax due dates can vary, the federal deadline remains consistent for most taxpayers.
Methods for Paying Your Federal Taxes
The Internal Revenue Service (IRS) provides several convenient methods for taxpayers to remit federal income tax payments. One popular electronic option is IRS Direct Pay, a free service that allows direct payments from a checking or savings account. To use IRS Direct Pay, you need to provide your tax information, verify your identity using details from a prior tax return, and then input your bank routing and account numbers. Payments can be scheduled up to 365 days in advance, with instant confirmation upon submission.
Another electronic payment system is the Electronic Federal Tax Payment System (EFTPS), which is useful for businesses or those making frequent payments. EFTPS requires prior enrollment, after which you can schedule payments up to 365 days in advance and receive email notifications. Payments made via EFTPS must be scheduled by 8 p.m. ET at least one day before the due date to be considered timely.
Taxpayers also have the option to pay using a credit or debit card through third-party payment processors, though processing fees apply to these transactions. Payments by check or money order are also accepted. These should be made payable to the “United States Treasury” and include:
- Your name
- Address
- Social Security number
- Tax year
- Related tax form or notice number
A payment voucher should accompany mailed payments. For those who prefer to pay with cash, retail partners offer a service where you can make payments, with a daily limit of around $1,000 and a fee per transaction.
Options If You Cannot Pay on Time
If you find yourself unable to pay your federal taxes by the due date, it is important to act promptly to mitigate potential penalties and interest. The IRS charges a failure-to-pay penalty of 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid, capped at 25% of your unpaid taxes. Additionally, interest accrues on underpayments, compounded daily, at a rate that is adjusted quarterly.
One immediate option is to request a short-term payment plan, which allows up to 180 additional days to pay your tax liability in full. While this option incurs no setup fee, interest and penalties continue to apply during this extended period. For those needing more time, an installment agreement allows for monthly payments over a longer period, up to 72 months. Setting up an installment agreement can reduce the failure-to-pay penalty to 0.25% per month while the agreement is active.
In situations of significant financial hardship, an Offer in Compromise (OIC) is an option, allowing you to settle your tax debt for a lower amount than what is owed. An OIC is considered if there is doubt regarding your ability to collect the full amount, a genuine dispute about the amount owed, or if full payment would create an economic hardship. The IRS assesses your ability to pay based on your income, expenses, and asset equity when considering an OIC.