Owe IRS More or Less than $10,000? Implications & Options
If you owe back taxes, your options vary depending on how much you owe. Generally, the IRS splits taxes owed into the following categories: less than $10,000, $10,000 to $50,000, and over $50,000. Here’s a look at what to expect in each situation and tips on what to do if you cannot afford to pay taxes. If you are looking for help with unpaid taxes, you can find local professionals specializing in helping taxpayers with unpaid taxes.
What If I Owe Less Than $10,000 to the IRS
When you owe the IRS several thousand dollars, it can feel stressful, but in most cases, you don’t need to worry that much. Since implementing the Fresh Start Initiative in 2011, the IRS has stopped issuing tax liens for most taxpayers who owe less than $10,000. However, there are exceptions.
If you repeatedly ignore notices or demands for payments, the IRS may decide to put a lien on your assets. A lien is basically a legal claim to your assets. If you sell your assets, the IRS has a right to the proceeds. To avoid this risk, you need to contact the IRS to set up a payment arrangement. Luckily, you automatically qualify for a Guaranteed Installment Agreement when you owe less than $10,000 in tax.
What to Do If You Owe the IRS More Than $10,000
If you owe more than $10,000, the IRS will add penalties and interest. The agency may also issue a federal tax lien once your bill exceeds $10,000. To prevent this, you need to pay in full or set up a payment plan. Or talk with a tax pro about making other arrangements for your tax debt such as an offer in compromise or currently not collectible status.
What If I Owe Less Than $50,000 to the IRS
If someone says “I owe the IRS $20,000” or “I owe the IRS $30,000”, their situation is going to be different than someone who owes less than $10,000. If you owe IRS over $10,000 in tax but less than $50,000, you fall into an intermediary category. In this range, the IRS is a lot more likely to issue a tax lien, but it’s also very easy to get a payment arrangement approved.
In particular, when you owe less than $50,000 to the IRS, you can qualify for a Simple Payment Plan. You can apply for this payment plan online or by using Form 9465 (Installment Agreement Request).
Luckily, you don’t have to provide a lot of information on your application. The IRS only wants to know how much you owe and how much you can afford to pay per month. If you owe less than $50,000, the IRS will automatically approve your payment arrangement as long as you can pay off your balance in 120 months or by the collection expiration date if sooner.
When the collection statute expiration date (CSED) falls before the end of the 120-month (10 year) period, you need to pay off your taxes sooner or sign a waiver to move back the expiration date.
If you can’t afford to pay your taxes owed by the CSED, you need to fill out Form 433-A or 433-F (Collection Information Statement). These forms require extremely detailed financial information, and they allow you to request a longer time to make payments, an offer in compromise, or other hardship arrangements.
Special Considerations for People Who Owe $25,000 to $50,000
If you owe between $25,000 and $50,000 and you have defaulted on a payment agreement in the past, you need to provide the IRS with some extra details when you apply for the new installment agreement. That includes your marital status, number of dependents, net income, and payment schedule. The IRS also wants to know about your car payments, health insurance premiums, and court-ordered payments such as repayments for a Chapter 13 bankruptcy or child support payments. Basically, this information reassures the IRS that you won’t default on the new agreement. However, in many cases, you may be able to get a payment plan approved without this information -- especially if you apply online.
What If I Owe More Than $50,000 - $100,000+
Taxpayers who owe IRS over $50,000 may face tax liens as described above, and if you don’t work out a payment plan with the IRS, you may also face tax levies. That’s when the IRS takes your assets and sells them to cover your taxes owed—it’s one of the most serious collection actions used by the agency.
Starting in 2018, the IRS may also take away your passport if you owe more than $50,000 in taxes (adjusted for inflation -- as of 2025, it's $65,000). Once the State Department has revoked your passport, you can return to the United States if you are out of the country, but after that, you can’t travel internationally until you resolve your taxes owed.
Usually, if you owe more than $50,000 in taxes, you have to provide the IRS with detailed financial statements to qualify for a payment plan. However, the IRS hasn't been enforcing this strict of a requirement since about 2018. Although the instructions for Form 9465 say you'll have to complete a financial disclosure if you owe over $50,000, the IRS often doesn't require it unless you owe over $250,000 or have a revenue officer assigned to your case.
What If I Owe Taxes for My Business
The rules for business taxes are slightly different from the rules for individual taxpayers. Active businesses can only qualify for streamlined agreements if they owe less than $25,000 in tax, in non-payroll tax debt and can pay off the balance within six years. Active businesses that owe payroll taxes must be able to pay within two years -- although the IRS may consider a longer time period on a case-by-case basis with a financial disclosure. Non-active businesses can qualify for a streamlined agreement to pay up to $25,000 in any type of tax debt, over a period of up to six years (up to $50,000 up to six years for out-of-business sole props). If you're a sole prop with no employees, you can apply for installment agreements as if you're an individual.
Alternatives to Payment Plans
Regardless of how much you owe the IRS, if you can’t afford to make payments, there are other options. For example, you may want to apply for an Offer in Compromise. That’s when you pay less than the total balance due. Or if you believe the tax debt is due exclusively to your spouse or former spouse, you might want to apply for innocent spouse relief -- look at FAQs about innocent spouse relief now.
If you truly don’t have enough money to pay anything, you can ask the IRS to label your account as temporarily uncollectible. For taxpayers with less than $10,000 in taxes, the IRS doesn’t require a lot of financial information or paperwork for this option, and in fact, since the implementation of the Fresh Start Initiative, acceptance rates have been at an all-time high.
Even if you owe more than $10,000, the IRS offers a simplified application process for these programs. When reviewing your application for an Offer in Compromise, the IRS looks at your future earning potential. If you're offering to pay a lump sum, they take into account one year of your disposable income, and if you're offering to make payments over a 24-month term, they look at two years of your disposable income.
Not Sure How Much You Owe?
In a lot of cases, people aren't sure how much they owe the IRS. They may have years of back taxes and not know how the penalties and interest have affected their accounts. Or, they may have unfiled returns and they're worried about how much they'll owe when they file. In both cases, a tax professional can help you to figure out if you owe the IRS and/or how much you owe the IRS. There are solutions to resolving tax debt for different situations.
Whether you owe the IRS $20,000, $40,000, $100,000, or any other amount, you need to meet certain criteria for the IRS to work with you. In particular, you need to stay compliant with future obligations. That means filling your tax returns and paying estimated taxes. If you own a business, you also need to make sure you submit payroll taxes and withholding for your employees. To ensure you don't incur another unexpected tax liability, always take steps to figure out why you owed taxes so that you can avoid that scenario in the future.
If you are looking to find an experienced tax professional who can help with IRS, you can start a search below.