If You Owe Taxes, When Do You Have to Pay?

Understanding tax payment requirements and deadlines is essential for compliance. This guide aims to demystify the process, providing clear information on tax payment timelines and available options.

Key Payment Deadlines and Extensions

For most individual taxpayers, the deadline for filing federal income tax returns and paying any taxes owed is April 15th. This date applies to income earned in the previous calendar year. If April 15th falls on a weekend or a holiday, the deadline shifts to the next business day.

An automatic six-month extension to file a tax return can be requested, moving the filing deadline to October 15th. This extension does not, however, extend the deadline for paying taxes due. Interest and penalties will still apply to any unpaid tax balance from the original April 15th due date. When filing an extension, estimate and pay your tax liability by the original April 15th deadline to avoid interest and penalties.

Addressing Payment Challenges

Failure to pay taxes by the deadline can result in penalties and interest charges. A failure-to-pay penalty is 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid, with a maximum penalty of 25%. Interest is charged on underpayments, calculated as the federal short-term rate plus 3%. For the first quarter of 2025, this rate for individuals is 7%.

For taxpayers facing difficulties paying their tax liability, the Internal Revenue Service (IRS) offers several options. A short-term payment plan allows up to 180 additional days to pay a tax balance, though interest and penalties continue to accrue during this period.

For those needing more time, an installment agreement permits monthly payments for up to 72 months. While interest and penalties still apply, the failure-to-pay penalty is reduced to 0.25% per month during an approved installment agreement. Taxpayers can apply for an installment agreement by filing IRS Form 9465.

An Offer in Compromise (OIC) allows taxpayers experiencing significant financial hardship to settle their tax liability for a lower amount than what is owed. The IRS assesses OICs case-by-case, considering factors like ability to pay, income, expenses, and asset equity.

“Currently Not Collectible” (CNC) status is a temporary relief the IRS may grant if it determines a taxpayer cannot pay their tax debt without causing severe financial hardship. While in CNC status, the IRS temporarily halts active collection efforts, but the tax debt does not disappear, and interest and penalties continue to accrue. Future tax refunds may also be applied to the outstanding debt.

Making Your Tax Payment

Several methods are available for submitting tax payments to the IRS. IRS Direct Pay is an online service that allows taxpayers to make payments directly from their checking or savings accounts without any fees. The Electronic Federal Tax Payment System (EFTPS) requires prior enrollment and allows scheduling payments up to 365 days in advance. EFTPS is a free service provided by the U.S. Department of the Treasury.

Payments can also be made using a debit card, credit card, or digital wallet through third-party payment processors, though these typically involve processing fees. When e-filing a tax return, Electronic Funds Withdrawal (EFW) allows for a direct debit from a bank account as part of the filing process. This method is free from the IRS and allows taxpayers to choose a specific withdrawal date on or before the tax deadline.

For traditional methods, payments can be sent by check or money order through the mail. Make it payable to the “U.S. Treasury” and include your name, address, daytime phone number, Social Security number, tax year, and the related tax form number. Send payments with IRS Form 1040-V, a payment voucher, to the correct IRS address. Cash payments may be possible through retail partners, usually for a small fee.

Understanding Estimated Tax Obligations

Certain taxpayers must pay estimated taxes throughout the year, rather than a single lump sum. This applies to individuals who expect to owe at least $1,000 in tax and whose income is not subject to sufficient withholding. Examples include self-employed individuals, independent contractors, or those with significant income from interest, dividends, rental properties, or alimony. The U.S. tax system operates on a “pay-as-you-go” basis, meaning tax liabilities should be met as income is earned.

Estimated taxes are paid in four installments throughout the year. The deadlines are April 15th, June 15th, September 15th, and January 15th of the following year. If any of these dates fall on a weekend or holiday, the deadline shifts to the next business day. Failing to pay enough estimated tax by these deadlines can result in an underpayment penalty. Taxpayers use IRS Form 1040-ES, Estimated Tax for Individuals, to calculate and make these quarterly payments.