We won’t beat around the bush: this past year was hard. If pandemic blues also struck you with a bout of bad financial luck, you’re not alone. In fact, in light of the COVID-19 pandemic’s continued impacts, the Internal Revenue Services (IRS) extended the individual tax deadline to May 17th, 2021

While an extra month to pay taxes is great, it might not be enough time for those of us just trying to get by.

It’s true that for some, tax season means a nice serving of tax refunds and/or stimulus check money. For others, though—especially contract workers—this time of year might mean an unwelcome hit to your bank account that you just can’t afford right now.

We’re here to let you know that, wherever you fall on the spectrum, it’s ok.

Before we talk about the options you have if you can’t pay your taxes, there’s one thing you should know: Putting off paying your taxes will cost you more money in the long run, no matter what you do.

That said, if paying in full right now just isn’t an option, we’ve pulled together some steps you can take to help make paying your taxes feel more manageable.

File your taxes on time

Even if you can’t pay your taxes on time, filing your return on time could help you avoid a late-filing fee. The fee for the 2020 tax year is 5% of unpaid tax, charged each month or partial month that your return is late, for up to five months.

So, for example, if you owe $100 in taxes for 2020, the late-filing fee would be $5 for a maximum of 5 months (in addition to the taxes you already owe).

If you file your return over 60 days late, you’ll also have to pay a penalty. The penalty for the 2020 tax year is whichever is smaller: $435, or 100% of taxes owed .

So, using the information above, if you were to file your taxes three months after the 2021 deadline, the total amount you would owe is: $15 (3 months x $5) + $100 (late penalty) + $100 (taxes owed) = $215.

Remember: Filing your taxes on time does not mean paying them in full.

Pay as much of your taxes as you can

If you can’t pay your taxes in full, the IRS recommends paying as much as you can. Based on how much tax you owe, the IRS could charge you interest that compounds daily, as well as a monthly late payment penalty.

2020 tax year interest rate: the federal short term rate plus 3% .

2020 tax year late payment penalty: 0.5% of the tax you owe per month (or partial month) until you pay it in full, or until you reach 25% of taxes owed.

Basically, the more you pay now, the less you’ll end up owing later.

Note: An extension to file is not the same as an extension to pay.

If you need more time to get your paperwork in order ahead of filing, you can request an extension to file. Remember though: an extension to file only gives you more time to file, not more time to pay.

Your tax payment is still due on tax day – in this case, May 17, 2021.

Weigh your options for paying in full now

Because late-payment interest and penalties are so dang expensive, you may want to consider options that could help you pay your taxes in full (or as much as you can) now.

If the costs of taking out a loan from your bank or cash advance from your credit card company is less than the total penalties and interest for your late tax payments, you may want to consider those options.

Note: We don’t recommend taking out cash advances unless it is absolutely necessary. Also keep in mind that loans can come with fees, interest, and impacts to your credit reports.

Before making your decision, you may want to research the pros and cons of these kinds of loans. It’s ultimately your call.

File your taxes on time

The bottom line? Explore all your options for paying now before deciding to pay later.

FTC’s website .

Look into a short term payment plan

If you just need a bit more time to pay your taxes (and owe less than $100,000) consider contacting the IRS to set up a short-term payment plan. Currently there’s no fee to set up a short-term payment plan plan, though interest and penalties may continue to apply until you pay your taxes in full.

To explore a short-term payment plan, visit the IRS web page on Online Payment Agreements (OPA) , or give them a call at 800-829-1040.

Explore other payment options

If you need more than 120 days to pay your taxes, or if paying them would leave you in financial hardship, the IRS offers additional payment options that might be available to you:

An installment agreement allows you to pay what you can over time (but may come with a set-up fee). If you’re a low-income taxpayer, you may be eligible for a reduced or waived fee. You can request an installment agreement by:

1. Visiting the this IRS web page , or
2. Calling the IRS at 800-829-1040.

An Offer in Compromise (OIC) allows you to settle your tax debt for less than the full amount you owe. The IRS recommends exploring all other payment options before applying for an OIC.

To read about what you need to qualify for an OIC, visit this IRS web page . The IRS “generally approve[s] an offer in compromise when the amount offered represents the most [they] can expect to collect within a reasonable period of time.” They consider the following factors, among others, when determining if you’d qualify:

1. Ability to pay,
2. Income,
3. Expenses, and
4. Asset equity.

A temporary delay in collection means requesting that the IRS report your account as “currently not collectible.” Being approved for a delay in collection doesn’t mean that your debt goes away, it just means the IRS has determined you can’t afford to pay the debt until your financial situation improves.

To qualify for a delay in collection, you may need to provide proof of your financial situation by including info about your assets and monthly income and expenses.

Remember: Even if you qualify for one of the above options, your tax debt will continue to accrue penalties and interest until it’s paid in full. If you are a low-income taxpayer, you may be eligible for waived penalties, though IRS doesn’t waive interest on unpaid taxes.

If this tax season has you sweatin’, we don’t blame you. This year’s been a tough one. We hope that knowing more of your options helps you make the right decision about when and how you’ll pay your taxes.