IRS Short-Term Extension to Pay Taxes Owed – Guide & Forms

IRS Payment Extension

If you think you can pay your tax bill within the next 30 to 120 days, a short-term extension may be the best option. There are a few different ways to get a short-term extension from the IRS. Some are official plans, while others are just strategies that work around the system.

Paying a Month or So Late

If you know you’ll have the money within a month or so after filing; you can usually get away with just paying late. Typically, the IRS doesn’t take any action until about 45 days after your tax return is due. At that point, the IRS starts sending out letters, and you risk facing liens, levies, or other collection activities.

However, if you make your payment before the serious letters start coming, you can avoid those risks. This is not an official plan, but it can work. Note however that even if you cannot pay, you must file your taxes. The penalty for not filing your tax return is significantly more than the penalty for not paying. Not filing a tax return and not paying will trigger the failure to file penalty which is 5% a month. The IRS charges the 5% even if the tax return is one day late.

If you can’t complete your tax return on time, request an extension. Use Form 4868 (Application for Automatic Extension of Time to File). You can mail that in or submit it electronically. Most tax prep software can also help you file this form.

Technically, you are supposed to pay the majority of the tax you owe when you request an extension, but if you don’t have the money, requesting an extension will buy you some time to file your tax return. Then, you can send in the payment a little late without facing the failure to file penalty (as long as you file by the tax extension deadline).

120-Day Short Term Payment Plan

If you can pay what you owe in 120 days, apply for an official payment plan on the IRS’s website. You must owe less than $100,000 to get this plan, and if you owe more than $50,000, you need to set up automatic payments to come out of your checking account or your paycheck.

You don’t have to provide a lot of financial details to get this plan. However, the important thing is to request it as soon as possible. If you wait until the IRS has initiated serious collection activity, it may be harder to get a payment plan.

Six Month Hardship Extension

If you need extra time due to financial hardship, you may be able to get a six-month payment extension. Apply using Form 1127 (Application for Extension of Time for Payment of Tax Due to Undue Hardship). Form 1127 is a relatively short form, but you have to explain why paying your tax creates undue hardship.

The IRs doesn’t exactly define that concept, but the agency explains that hardship needs to be more than just an inconvenience. For example, if you are selling a property to pay your tax bill and you can get double the price in three months, that may constitute an undue financial hardship, and you may get an extension. In contrast, if you have the money in a retirement account and you just don’t want to liquidate, that is most likely considered an inconvenience by the IRS. In a case like that, you probably won’t get a hardship request approved.

If you need an extension to pay your estate tax, file Form 4768 (application for Extension of Time to File a Return and/or Pay US Estate Taxes).

If you cannot pay your tax in full, can help you find the best payment plan or debt solution for your situation. Our partners include IRS tax attorneys, former IRS agents, CPAs, and other tax debt resolution specialists. They can negotiate an excellent settlement for you. To get started, fill out the request form and get a free consultation.

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