How Do I Pay The IRS When I'm Flat Broke? - Need Options for Tax Debt

I really messed up with my taxes and now I owe the IRS somewhere between $22,000-$27,000. The problem is I literally have maybe $3,500 in total assets and my income is super inconsistent right now. Making things even more complicated, I'm heading back to school next fall to try to get my life on track, which means I'll basically have zero income while studying full-time. I know the IRS offers payment plans, but I'm worried I won't be able to afford even the minimum monthly payment they require. What happens in that situation? Are there any other options for someone in my position? I genuinely want to handle this responsibility and pay off what I owe, but it feels impossible right now. I'm starting to panic because I don't see a way forward. Any advice would be really appreciated.

0 coins

19 comments

Nia Johnson

•8M

The good news is you have options even if you're financially strapped. First, don't panic - the IRS has programs specifically for situations like yours. The most immediate solution would be an installment agreement, but you're right to be concerned about the monthly minimum. For debts over $10,000, the standard minimum payment is calculated by dividing your total debt by 72 months. However, if you can prove financial hardship, the IRS offers what's called a "Partial Payment Installment Agreement" where you might pay significantly less each month based on your actual ability to pay. Another option is Currently Not Collectible (CNC) status. If you can demonstrate that paying anything would cause significant financial hardship, the IRS can temporarily classify your account as CNC. The debt doesn't go away, but collection efforts pause until your financial situation improves. You might also qualify for an Offer in Compromise, which allows you to settle your tax debt for less than the full amount. This is harder to get approved for, but worth exploring if your financial situation is truly dire.

0 coins

Nia Johnson

•8M

To prove financial hardship for a Partial Payment Installment Agreement, you'll need to complete Form 433-F (Collection Information Statement) which details your income, expenses, assets and liabilities. Be prepared to provide documentation like bank statements, pay stubs, and bills. The IRS will analyze what you can reasonably pay after necessary living expenses. For Offers in Compromise, there's no set percentage - it's based on your specific financial situation. The IRS looks at your ability to pay, income, expenses, and asset equity. Some people settle for as little as 10-20% of their original debt, while others might pay 50% or more. The average accepted offer tends to be around 20-30% of the original tax debt, but every case is different based on individual circumstances.

0 coins

CyberNinja

•8M

After struggling with a similar tax debt situation, I found this AI-powered tool called taxr.ai (https://taxr.ai) that completely changed my approach. I was also facing a large tax debt with limited income and wasn't sure what program I'd qualify for. What I liked is that it analyzed my specific financial situation and showed me exactly what relief programs I qualified for - in my case, it determined I was eligible for Currently Not Collectible status which I didn't even know existed! It also helped me understand exactly what documentation I needed to provide to the IRS to prove my hardship. The system walked me through preparing all the necessary forms and even created a customized letter explaining my situation to the IRS. It was like having a tax professional guide me through the process but for way less.

0 coins

CyberNinja

•8M

The IRS accepted exactly what the tool recommended for my situation. I was honestly surprised because I had tried using free online calculators before that gave wildly different results. This tool asks much more detailed questions about your specific financial situation and seems to use the same criteria the IRS uses. It absolutely works for self-employed people with inconsistent income. That's actually one of its strengths - it has specific sections for variable income where you can enter your monthly fluctuations. It then calculates your average income realistically rather than just using your annual number divided by 12, which is what causes problems with many other systems. It also accounts for business expenses properly which makes a huge difference in qualifying for programs.

0 coins

Aisha Abdullah

•8M

Just wanted to update - I ended up trying taxr.ai after asking about it here and it was incredibly helpful for my situation. I was struggling with about $18K in tax debt while trying to pay for school and having inconsistent income. The tool recommended I apply for Currently Not Collectible status based on my financial situation and guided me through preparing all the documentation. When I called the IRS with all my paperwork ready (following the exact script the tool provided), the agent approved my CNC status during that call! The relief of having collections paused while I finish school is HUGE. The tool also created a future payment plan for when I graduate and start earning more, so I have a clear path forward. Definitely worth checking out if you're in a similar situation.

0 coins

Ethan Davis

•8M

Another option worth mentioning is Claimyr (https://claimyr.com) which helped me actually get through to an IRS agent when I was dealing with my tax debt issues. I spent WEEKS trying to call the IRS myself and either got disconnected or was on hold for hours. After using their service, I got connected to an IRS agent in about 15 minutes instead of waiting for hours or days. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c This was crucial because once I finally spoke with an agent, they helped me set up a hardship agreement that I could actually afford based on my income. My situation wasn't exactly like yours (I owed about $12K), but being able to speak directly with someone made all the difference in getting reasonable terms.

0 coins

Ethan Davis

•8M

It's not about getting to the front of the queue - they use automated technology that handles the calling and waiting process for you. Basically, their system continuously calls the IRS using optimized timing and navigation through the phone menu system, then when they finally get through, they connect that successful call to your phone so you only join when there's actually an agent ready to talk. I was skeptical too until I tried it. They don't promise instant connection - what they do is handle the frustrating part of having your phone tied up for hours on hold. Instead, you go about your day and they call you when they've got an agent on the line. In my experience, it took about 15 minutes, but it might vary depending on IRS call volume. It worked exactly as advertised and saved me literally hours of time and frustration.

0 coins

Carmen Ortiz

•8M

I need to apologize and follow up on my skeptical comment. After the terrible experiences I've had trying to contact the IRS myself (7+ attempts, hours on hold, disconnections), I was desperate enough to try Claimyr. It actually worked exactly as described. Their system handled all the waiting and phone tree navigation, then called me when they had an IRS agent on the line. I was connected within 22 minutes, which is miraculous compared to my previous attempts. Being able to finally speak with an actual IRS representative made all the difference. The agent reviewed my situation and helped me apply for Currently Not Collectible status since I'm also dealing with financial hardship. I was able to get collections paused while I deal with some health issues that have impacted my ability to work. Sometimes being wrong feels pretty good - this service saved me so much stress and actually helped me get my tax situation sorted out.

0 coins

MidnightRider

•8M

You might also want to look into the Taxpayer Advocate Service. They're an independent organization within the IRS that helps taxpayers resolve problems. They can sometimes help negotiate more manageable payment plans if you're experiencing financial difficulties. I used them last year when I was in a similar situation (owed about $18k) and they were surprisingly helpful. Their service is free and they can sometimes cut through red tape faster than you can on your own.

0 coins

MidnightRider

•8M

You can contact the Taxpayer Advocate Service directly by calling 1-877-777-4778 or by filling out Form 911 (Request for Taxpayer Advocate Service Assistance). You can also find your local office on the TAS website - sometimes it's faster to work with your local office. The wait time varies depending on your location and the complexity of your case. In my experience, I got an initial response within about a week, which is much faster than trying to resolve issues through normal IRS channels. Once you're assigned an advocate, they become your point of contact and handle communications with the IRS on your behalf, which simplifies the whole process considerably. They're especially helpful if you've already tried to resolve your issue through normal IRS channels without success.

0 coins