What To Do Now If You Can’t Pay Your Taxes in AprilWhen it comes to your taxes, the best way to avoid stress and problems is to use the old fashioned method—pay as you go—either through payroll withholding or timely estimated tax payments. Unfortunately, even with the best intentions it’s possible to get behind. Millions of people owe back taxes, falling behind for a number of reasons including illness, a change in financial circumstances, or simply forgetting to file.

If you’re one of these millions, here are some suggestions that can help you get back on track with the IRS:

Pay as much as you can afford to pay in April and file for a tax extension. This will buy you six more months to raise the rest of the money, with only a small penalty of 0.5 percent per month) and interest of 3 percent per year.

Use a credit card to pay the taxes due. If your credit is good, you can probably qualify for a low interest rate, or even a 0 percent interest rate for 12 to 18 months. Do your research to figure out if this is the best option for you, then use one of the IRS/state approved online payment systems to pay your taxes with your credit card. One last thought: If you don’t think you’ll be able to pay the balance in full on time, research the interest rate you’ll receive at the end of the promotional period and consider selecting the card with the lowest rate.

Borrow money from family or friends. They will likely not do this on a regular basis, but if you have established their trust, you might get some help. In order for the lender to avoid tax complications, he or she can charge the IRS’ applicable federal interest rates (AFR) in effect on the date of the loan.

Request an installment agreement or offer in compromise (OIC). The installment agreement allows you to make monthly payments to pay your tax debt in full, rather than pay it all at once. If you owe under $50,000, you can even file online to get approved. An OIC is much more complicated and involves what feels like two pounds of paper to prove your asset balances, bills, income, and expenses. An OIC allows you to settle your debt for less than you owe. Generally, you don’t want to do this alone. But if you really have very little income and no assets—and no prospects for increases—you could actually get away with preparing and filing your own offer in compromise.

Generally, one of the last things you ever want to do is be in debt to the IRS or a state agency. When you set up any kind of payment plans with them and you miss a payment, they can garnish wages, hold your IRS and state refunds, and levy your accounts receivable. This is much different from owing money to a bank or commercial lender that will simply report the missed payment to a credit reporting agency. So, if at all possible, don’t put yourself in debt to the IRS or state.

Eva Rosenberg, EA is the publisher of TaxMama.com ®, where your tax questions are answered. She is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches terrific courses that might help individuals and small businesses at CPE Link.