Face up to it. Even if you can’t come up with the tax, you should file or extend your return on time. The penalty for failure to pay is 1/2 percent per month or part month. The failure to file and pay is ten times higher — 5% per month or part month, up to 25% of the tax owed.
Extend it. If you have most, but not quite all, of the cash you need, simply filing Form 4868 and paying up might be a good option. If your extension gets 90% of your tax paid in, the remainder can be paid by the October due date with only interest (the current rate is 3%), and no penalty.
Borrow it. If you have a home equity line of credit or a good relationship with your friendly banker, and your financial embarrassment is just a matter of timing, this will be your cheapest option. You can also borrow by credit card, but the fees can get ugly.
An Online Payment Agreement with IRS can be a good option if the cash is on the way soon and the bank isn’t a good option. The IRS Online Payment Agreement Application page can help.
An installment agreement might help taxpayers who need some time to come up with the cash. You can apply online if you owe up to $50,000, or you can file Form 9465. For larger balances, you will have to complete a financial statement.
All of these are better options than payday loans, car title loans, and the like. They are much better than taking early withdrawals from IRA accounts, with their 10% penalty and additional income tax. And they are infineitely better than just not paying; that just makes it worse with penalties and interest.
Come back every day through the April 17 deadline for more filing season tips!