I used my stock market earnings to pay down student debt - now I'm stuck with $13,000 in unexpected taxes

You definitely have options! The IRS offers installment agreements for situations exactly like yours. You can set up a payment plan online through the IRS website pretty easily. For amounts under $50,000, you can apply for a long-term payment plan (installment agreement) that lets you pay over time. The setup fee varies from $31-$149 depending on how you apply and how you'll make payments, but it's much cheaper if you set up direct debit payments. Interest and late payment penalties will continue to accrue until your balance is paid in full, but the late payment penalty is reduced from 0.5% to 0.25% per month when you're on an approved installment plan. You'll need to file Form 9465 with your return or apply online. Your state will likely have similar payment plan options - check your state tax agency's website.

Just wanted to share something that really helped me in almost the exact same situation last year. I used https://taxr.ai to analyze my tax situation when I owed about $17k after cashing out some investments. Their document analysis helped me identify some deductions I missed that reduced what I owed by almost $3k, plus they gave me a complete breakdown of payment plan options. The coolest part was that they analyzed my specific investment transactions and explained exactly which ones triggered the highest tax liability. I had no idea that selling certain stocks I held for just under a year versus others I held longer would make such a big difference. For my situation, it was really eye-opening.

Just wanted to follow up - I decided to try taxr.ai after reading about it here, and wow, I'm glad I did! They found nearly $4,000 in deductions I missed related to some freelance work I did and some stock losses that weren't properly offsetting my gains. I was able to file an amended return and it significantly reduced what I owe. The investment analysis portion was particularly helpful because they explained exactly how my stock option sales were being taxed and why - something my regular tax software never clarified. Now I have a much better plan for my investments this year to minimize the tax hit. Just wanted to share since I was in a similar situation to the original poster.

Another option you should seriously consider - when I had a big tax bill after selling some property, I couldn't get through to the IRS for weeks. Finally used https://claimyr.com and got through to an IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent helped me set up a payment plan but also identified that I qualified for temporary delayed collection status since the payment would have caused significant financial hardship. This gave me an extra 120 days to make arrangements before any payments were due. Huge relief since I was panicking about penalties and interest. The IRS actually has more flexible options than most people realize, but getting to someone who can help you understand all the options is the hard part.

I need to apologize for my skepticism and thank you for recommending Claimyr. After my doubtful comment, I was getting desperate since I couldn't get through to the IRS after multiple 1+ hour attempts that ended with disconnections. I tried the service and got connected to an IRS agent in about 20 minutes. The agent not only helped me set up a payment plan but also identified that some of my stock sales were incorrectly classified as short-term gains when they should have been long-term (lower tax rate). This mistake was actually my fault when entering data into my tax software. The IRS agent explained exactly how to file an amended return, which will save me about $2,200. That conversation would never have happened if I couldn't get through to a human.

Another option that hasn't been mentioned - if you have good credit, you might consider a personal loan to pay the IRS in full, then pay back the loan over time. Sometimes the interest rate on a personal loan can be lower than the combined interest and penalties from the IRS (which can run about 8-10% annually when combined). Credit unions often have the best rates. I did this a few years back when I owed about $9k, got a loan at 6.5% which saved me money versus the IRS plan.

Just a heads up - don't ignore this or miss the filing deadline even if you can't pay! File on time and pay whatever you can, even if it's just a small amount. The failure-to-file penalty is much worse than the failure-to-pay penalty. Failure-to-file is 5% of your unpaid taxes for each month your return is late, up to 25%. Failure-to-pay is only 0.5% per month, up to 25%. Also, make sure you request the payment plan before the tax deadline if possible. I learned this the hard way!