Owe the IRS Under $10,000? Here’s Why You Should Still Act Now

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Taxes Tax Share Share Close Mail Page URL https://money.com/owe-irs-under-10000-what-to-do/ Link copied! Owe the IRS Under $10,000? Here's Why You Should Still Act Now By: Marc Guberti Marc Guberti Marc Guberti is a personal finance writer who hosts Breakthrough Success, a podcast where he teaches listeners how to grow their businesses and achieve personal transformations. Has also written: 5 IRS Letters That Mean You're Running Out of Time (and What to Do About Each One) Are You Money-Shy? 5 Signs You May Avoid Wealth Without Realizing It 7 Simple Money Habits That Can Strengthen Your Retirement Over Time 3 Popular Money Rules That May Stop Making Sense After 40 How Much Money You Should Have Saved by Every Age — and What to Do If You're Behind See full bio Published: Apr 17, 2026 4 min read Getty Images Small debt can have real consequences if you let it grow too long — and that’s certainly the case with tax debt that you can accumulate from not paying the IRS what you owe. Even if your debt is below $10,000, the agency will charge interest and penalties until you pay the balance. Acting now and being aware of the agency’s predictable escalation timeline can help you resolve the issue without your tax debt growing to an unmanageable amount. Must ReadExperts are Bullish on Gold — Here's How to Get InWarren Buffett on Market Volatility — and 3 Ways You Can Take Advantage What to know about interest and penalties When the due date for overdue taxes passes, the IRS will typically start charging interest. The rate of that interest is the federal short-term rate plus 3%, and it’s determined quarterly. The interest on unpaid taxes compounds daily (in other words, it can add up quickly). If you don’t pay what you owe, you’ll also face a monthly late payment penalty. The penalty is 0.5% what you owe per month or part of the month up to 25%. That increases to 1% 10 days after the IRS has issued a notice of intent to levy your property because of the unpaid taxes. However, if you get an installment agreement with the IRS, the interest rate drops to 0.25% while the agreement is in effect. A small debt can snowball into a big one if you aren’t careful, but when it comes to IRS debt, there is a predictable sequence of events. After you file taxes, you will receive a CP14 notice if you owe any money. If you don’t pay, you'll get more noticies. But the IRS can eventually seize property to recover what you owe.

Where People Are Solving Their Tax Issues Right NowExplore expert tax relief options with Anthem Tax ServicesOwe back taxes? See how Priority Tax Relief's tax professionals can help What to do when you owe The simplest way to resolve the issue and avoid more interest and penalties is to pay the full amount you owe, if you can. You can pay online directly from a bank account, debit card, credit card or digital wallet. You can also pay via an IRS account online, with a money wire, cash or money order in the mail, or cash through a retail partner like Dollar General, Family Dollar or CVS Pharmacy. The IRS has details on its website. You can also set up a payment plan, and there are several options. You can set up a short-term payment plan during which you'll within 180 days or less or a long-term payment plan. And if you owe $10,000 or less (excluding interest and penalties), you could be eligible for a “Guaranteed Installment Agreement,” which means the IRS must accept your payment plan request. Separately, you may be eligible for a temporary delay in paying if you can’t pay because of a financial hardship. If you’re unsure what makes sense for you, consider consulting the IRS or a tax professional. Must ReadExperts are Bullish on Gold — Here's How to Get InWarren Buffett on Market Volatility — and 3 Ways You Can Take Advantage