You can file your income tax return even if you don’t have the money to pay what’s owed. Once your return is processed, the IRS will bill you for the balance due. While doing nothing can lead to steeper penalties, being proactive can significantly reduce the financial impact.

Consider an IRS Payment Plan

If you can’t pay in full, it’s usually best to contact the IRS as soon as possible to set up a payment plan. By enrolling in an installment agreement, you may reduce or avoid certain penalties, even though interest will continue to accrue.

You can apply for a payment plan directly through the IRS website: https://www.irs.gov/payments/online-payment-agreement-application

Filing an Extension

The IRS also allows taxpayers to file an extension without paying the full amount due. However, the extension form must include an estimate of the tax owed—the IRS will not accept an extension without this information.

Filing an extension:

• Gives you additional time to file your return
• Waives the late‑filing penalty as long as the return is filed by the extended due date
• Does not eliminate interest or late‑payment penalties on any unpaid balance

For most individuals, the extended filing deadline is October 15, 2026.

Disaster Relief Extensions

If you live in a federally declared disaster area, the IRS may grant automatic filing and payment relief. In these cases, both filing and payment deadlines may be extended, and late‑payment penalties may not apply as long as the tax is paid by the IRS‑designated disaster relief deadline.

You can find current disaster‑related tax relief information here: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations

Penalties and Interest to Be Aware Of

• A late‑payment penalty of 0.5% per month generally applies to unpaid tax balances after April 15, 2025, unless at least 90% of the final tax liability was paid by that date.
• Interest is charged on any unpaid tax and cannot be waived. The current interest rate for individuals is 7%.
• If a 2025 individual income tax return is not filed by April 15, 2026, and no valid extension or disaster relief applies, a late‑filing penalty of 5% per month (up to a maximum of 25%) may be assessed.
  • In some states, such as California, penalties may be calculated on the entire tax due without credit for prior payments. Always consult your tax advisor for state‑specific rules.

The Bottom Line

Even if you can’t pay what you owe, filing on time, estimating your tax accurately, and communicating with the IRS can help minimize penalties and keep the situation manageable. Ignoring the issue only makes it more expensive.

If you’re unsure which option is best for your situation, a tax professional can help you evaluate your choices and avoid unnecessary penalties.

If you need guidance that is tailored specifically to your unique situation, we encourage you to connect directly with Pro Advisor Support. Their experienced team specializes in assisting clergy and church organizations with complex tax, payroll, bookkeeping, and HR matters. Whether you have detailed questions about compliance, deductions, or planning strategies, they can provide expert advice and walk you through the next steps with clarity and confidence.

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Tel: (888) 421.0101