What If I Can't Pay My Crypto Taxes?

Arthur Teller
ByArthur Teller, CPAReviewed byTynisa (Ty) Gaines, EAUpdated on May 20, 2024 · minute read
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  • If you're unable to pay your taxes on time, there are options available, including IRS payment plans. When in doubt, seek assistance from crypto tax experts like ours at TokenTax.

  • The IRS offers different payment plans based on the amount owed, providing flexibility for taxpayers to address their financial obligations gradually.

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:

1. You owe $50,000 or less including penalties and interest.

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.

2. You owe $100,000 or less including penalties and interest.

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.

3. You owe more than $100,000 including penalties and interest.

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.

4. You owe between $50,000 and $100,000 but can’t pay within 180 days.

Follow the instructions in the previous section.

5. Your tax liability is greater than the sum total of your assets.

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.

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What if I can't pay my crypto taxes FAQs

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.

To stay up to date on the latest, follow TokenTax on Twitter @tokentax.

Arthur Teller
Arthur TellerCOO (Former) at TokenTax
Arthur came to TokenTax after 12 years at KPMG. A specialist in partnership taxation and enterprise tax software, he is a licensed CPA in both California and Illinois and a member of the AICPA.
Tynisa (Ty) Gaines
Reviewed byTynisa (Ty) GainesTax Expert at TokenTax
Tynisa (Ty) Gaines, EA has more than 20 years of experience as a tax professional. Ty has published numerous tax articles, two tax e-books, and an academic publication on cryptocurrency for the National Income Tax Workbook.

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