What If I Can't Pay My Crypto Taxes?

If you don’t have the funds to pay your taxes by the due date, you’re not alone. Many crypto traders are in the same situation this year.

You do have options. Most people choose to apply for one of the IRS payment plans. Be aware, however, that if you go this route, you will need to be completely transparent with the IRS about your finances. You’ll also have to pay some associated fees.

Tax controversy experts can be extremely helpful for taxpayers who need extra time to pay their taxes. We don't offer this service at TokenTax, but we're happy to connect you with the attorneys we recommend.

Your payment plan options vary based on how much you owe and how quickly you think you’ll be able to pay off the debt:

You're eligible for a long-term online payment plan. In this situation, you make monthly online payments to the IRS until the balance of your unpaid taxes is met in full (up to 5 years). You will still accrue penalties and interest. You can apply online at the IRS's website.

You're eligible for a short-term online payment plan. In this situation, you have 180 days to pay your balance. You will still accrue penalties and interest. You can apply online at the IRS's website.

You may apply for an installment agreement with IRS Form 9465. This form has to be filed along with Form 433-F, which requires full disclosure of your assets.

TokenTax can help you complete Form 9465, but you will need to file it and Form 433-F yourself. If you’d like, we can introduce you to a tax controversy expert who can help you file forms and negotiate the terms of your IRS agreement.

Follow the instructions in the previous section.

There is another option called an “offer in compromise,” which settles a taxpayer’s debt for less than the full amount owed. However, most people don’t qualify for this, because your tax liability must be greater than the sum total of your assets, including your home, vehicle, and other property. If you think you are eligible, we strongly recommend contacting a tax controversy expert.

Here are answers to frequently asked questions about what to do if you're unable to pay your crypto taxes.

Can TokenTax assist with IRS payment plans?

TokenTax does not directly offer assistance with IRS payment plans. However, we can connect you with recommended tax controversy experts who can provide valuable guidance and support.

Are there specific eligibility criteria for the long-term online payment plan?

To qualify for the long-term online payment plan, your total tax debt, including penalties and interest, must be $50,000 or less. The plan allows monthly online payments for up to 5 years.

What if I owe more than $100,000 in taxes?

If your tax liability exceeds $100,000, you may apply for an installment agreement using IRS Form 9465. This involves full disclosure of your assets through Form 433-F. TokenTax can assist with completing Form 9465 and connect you with experts for further support.

Can I settle my tax debt for less than the full amount owed?

An "offer in compromise" may be an option for settling your debt for less than the total amount owed. However, qualification is stringent, and your tax liability must surpass the sum total of your assets. Consultation with a tax controversy expert is advisable to determine eligibility.

Is there a difference between short- and long-term online payment plans?

Yes, the short-term online payment plan allows a 180-day window to pay off your balance, while the long-term plan spans up to 5 years. Both plans accrue penalties and interest, and applications can be submitted online via the IRS website.