Rules for Paying Off Back Taxes

I made a mistake on my tax return and now I've got a bill for back taxes. Will the IRS let me pay it over time?

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Generally, yes. If you can cover the bill within a few months, call the IRS at 800-829-1040 to request a 120-day extension. Interest and penalties will continue to accrue during the extension period.

Otherwise, pay off as much as you can now and apply for an installment agreement to split the rest of the balance into monthly payments. If you owe $50,000 or less in taxes, penalties and interest, apply at www.irs.gov for a plan to pay off the bill over a period of up to six years; your application will likely be accepted, says Jackie Perlman, principal tax research analyst for the Tax Institute at H&R Block.

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You're guaranteed an installment agreement for a balance of $10,000 or less as long as you've filed your returns and paid taxes on time for the past five years and you agree to pay off the current bill within three years. You'll pay a one-time fee plus a late-payment penalty and interest for each month the agreement is in effect.

For amounts higher than $50,000, you must submit IRS Form 9465 to apply and Form 433-F to detail your assets, liabilities and income.

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Lisa has been the editor of Kiplinger Personal Finance since June 2023. Previously, she spent more than a decade reporting and writing for the magazine on a variety of topics, including credit, banking and retirement. She has shared her expertise as a guest on the Today Show, CNN, Fox, NPR, Cheddar and many other media outlets around the nation. Lisa graduated from Ball State University and received the school’s “Graduate of the Last Decade” award in 2014. A military spouse, she has moved around the U.S. and currently lives in the Philadelphia area with her husband and two sons.