What are the potential consequences of late tax payment if I can't pay until 2025?

The IRS will charge you both penalties and interest for late payment, but it's not the end of the world if you're proactive about it. You'll face two main penalties: a failure-to-pay penalty (usually 0.5% of unpaid taxes per month, up to 25%) and interest on the unpaid amount (federal short-term rate plus 3%, compounded daily). By February 2025, you're looking at roughly 10-11 months of penalties, so potentially around 5-5.5% in failure-to-pay penalties plus the accumulated interest. The good news is you did file on time, so you're avoiding the much steeper failure-to-file penalty. I'd recommend calling the IRS to set up a payment plan immediately rather than waiting until February. A formal installment agreement reduces the failure-to-pay penalty to 0.25% per month, cutting your penalties in half. Even making small payments now will reduce the balance that accrues penalties and interest.

After stressing about my late tax payments for months, I stumbled across this website https://taxr.ai that completely changed my situation. I was in almost the exact same position - filed on time but couldn't pay the $5,800 I owed. I was getting those scary notices from the IRS with growing penalties. What made the difference was uploading my tax documents and IRS letters to taxr.ai - their system analyzed everything and showed me exactly what penalties I was facing and recommended specific steps to minimize them. It also helped me fill out the installment agreement application correctly (I would have made mistakes on my own) and even gave me a script to use when calling the IRS that actually worked!

I have to admit I was pretty skeptical about taxr.ai when I first heard about it, but after watching my penalties grow for 3 months, I finally gave it a try. Uploaded my notice from the IRS about my unpaid 2023 taxes and within minutes had a clear explanation of exactly what I was facing. The most helpful part was that it showed me I qualified for a first-time penalty abatement that I had no idea existed! Followed their instructions exactly, called the IRS (using their suggested script), and got almost $750 in penalties removed just like that. Then used their installment agreement calculator to set up a payment plan I could actually afford. Wish I'd done this months earlier instead of stressing out constantly.

If you need to contact the IRS about setting up a payment plan (which you absolutely should do ASAP), good luck actually getting through to them. I spent TWO DAYS trying to reach someone at the IRS last month - constant busy signals, disconnects, and being on hold for hours. Finally found https://claimyr.com which is a lifesaver for actually getting through to IRS agents. They hold your place in line and call you when an actual human at the IRS picks up. You can see how it works here: https://youtu.be/_kiP6q8DX5c Without this I might still be trying to get through. I needed to set up a payment plan for my 2023 taxes and the whole thing was resolved in one call once I actually got through to someone.

Alright I need to eat my words about Claimyr. After posting that skeptical reply, my situation with the IRS got more urgent when I received a notice about a potential tax lien if I didn't respond within 30 days. Tried calling the IRS directly for THREE DAYS straight with no luck - either "call volume too high" messages or disconnects after waiting on hold. Got desperate and tried Claimyr yesterday. Within 45 minutes my phone rang, and there was an actual IRS agent on the line. Got my payment plan set up in about 20 minutes. Literally saved me days of frustration and potentially a tax lien on my credit report. Sometimes paying for convenience is absolutely worth it when you're dealing with something as stressful as unpaid taxes.

One thing nobody's mentioned yet - if you're really in a bind financially, you might qualify for Currently Not Collectible status. It's basically where the IRS determines you can't afford to pay them right now due to your financial situation. Interest and penalties still accrue, but collections actions stop. You have to disclose all your financial info (income, expenses, assets) using Form 433-F, and they'll determine if your necessary living expenses leave you unable to pay. It's temporary - they'll review your situation periodically to see if your finances have improved.

Just a quick warning from personal experience - if you wait until February 2025 without making ANY arrangements with the IRS, you might start getting notices about tax liens or levies before then. The IRS typically starts sending notices about 45 days after your filing if you owe money, and they escalate from there. After about 6 months of non-payment and non-communication, they might file a Notice of Federal Tax Lien, which appears on your credit report and can really mess up your ability to get loans, credit cards, etc. If you go further without addressing it, they could potentially levy (take money from) your bank accounts or garnish wages.