Help! I Don't Have Enough Money to Pay My Taxes

About three-quarters of taxpayers receive a refund, according to 2014 data from the Internal Revenue Service. If you’re among the roughly 27% whose returns are processed and you owe money, you have an important question to answer: How will you pay?

Perhaps more important: Can you afford to pay? If you have the cash on hand, you have the option of paying by directly transferring funds from your bank account, writing and mailing a check to the IRS (or your state government, if you owe state taxes) or paying with a credit or debit card. If you’re paying with a debit card, the payment processing company will charge a fee of $3.89 to $3.95, but credit card payments require a convenience fee based on the amount you’re paying. If the fee outweighs the benefits of paying electronically, consider another payment method.

If you can’t afford the entire amount due, you should contact the IRS about your payment options. Even if you won’t be able to pay the taxes by the deadline, it’s in your best interest to make as much of a payment as you can before April 18 to avoid failure-to-pay penalties, according to the IRS website.

Request a Short Extension

You can ask for an additional 60 to 120 days to pay your debt by filling out an Online Payment Agreement application on the IRS website (you can also call the IRS at 800-829-1040 to set up the payment agreement).

Paying as much as you can afford by the deadline will minimize the amount you pay in penalties and interest later, as will a shorter payment agreement. The amount you owe by the end of your extension will be calculated to include interest accrued to the end date, so if you plan to pay the full amount before the end of your extension, call the IRS to recalculate what you owe.

Apply for an Installment Agreement

If you need more than 120 days to be able to pay the full debt, apply for an installment agreement. You also have the option of submitting Form 9465, Installment Agreement Request, in writing or calling the IRS, but the online application is a faster route.

You will be required to pay a one-time fee for entering an installment agreement. Once it’s set up, you will have a minimum monthly payment and due date, much like other bills, the difference being you dictate how much you can pay each month and what day you’d like the payment due.

Use an Alternative Payment Method

You could finance your tax burden with a credit card or personal loan, if you’d rather manage those instruments than deal with the IRS. Keep in mind there’s a credit card processing fee — a percentage of what you owe — in addition to whatever APR your card carries, so that can be a costly option. The APR for late tax payments is 3%, which is pretty low, but you also need to consider the fees associated with late tax payments and setting up an installment plan.

It’s up to you to determine the best option for your budget and your credit standing. Using a loan or credit card to pay your taxes can impact your credit. (You can get a free credit report summary on Credit.com to see how an increased debt load would impact your scores.) The most important thing is to pay what you can by the deadline, because a tax lien and tax debt collectors could cause financial problems, too.

More From Credit.com

How to File Your Taxes for FreeHow to Protect Yourself from Taxpayer Identity TheftHow to Maximize Your Tax Refund

This article originally appeared on Credit.com.

Christine DiGangi covers personal finance for Credit.com. Previously, she managed communications for the Society of Professional Journalists, served as a copy editor of The New York Times News Service and worked as a reporter for the Oregonian and the News & Record. More by Christine DiGangi