Home |IRS Tax Return | I'm in a tough financial situation with an IRS debt of around $2000 due in October, and I'm living paycheck to paycheck with existing college debt. The IRS help programs have certain criteria I don't meet. What are my options for handling this debt without putting it all on my credit card, considering I want to avoid payday loans?

I'm in a tough financial situation with an IRS debt of around $2000 due in October, and I'm living paycheck to paycheck with existing college debt. The IRS help programs have certain criteria I don't meet. What are my options for handling this debt without putting it all on my credit card, considering I want to avoid payday loans?

Robert James, 20+ years of experience in IRS matters
Answered on September 24,2023

If you signed up for the six-month Short-term or Full pay option, you can get a Long-term installment agreement online. You can try to apply now, or after the six months is up.

You might also qualify for Currently Not Collectible status, where IRS doesn't require you to make payments until your financial situation improves. The tax debt doesn't go away, and you still will accrue interest and Failure to Pay penalties. You can make voluntary payments when in CNC status though.

Currently Not Collectible

I would suggest getting a Long-term installment plan unless you cannot afford to make any payments at all, because you should get a lower Failure to Pay penalty rate since you filed on time. But you might also want to use First time penalty abatement to get those penalties waived, so that you only wind up paying 7% - 8% annual interest.

Penalty Relief due to First Time Abate or Other Administrative Waiver

Here's a couple of resources direct with IRS.

Additional Information on Payment Plans

Offer in Compromise

Taxpayer Assistance Center Office Locator

Low Income Taxpayer Clinics (LITC)

Taxpayer Advocate Service

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