If you're an employee who filed a W-2 tax form to have your employer withhold your taxes, it's likely you don't usually pay anything on April 15th. Chances are you may get a refund — a nice little windfall every spring.

But others, especially self-employed people, are on the hook to pony up some cash on Tax Day. Some taxpayers may still owe some taxes if they hadn't paid enough throughout the year. And most self-employed people will need to make an estimated tax payment for Q1 that day. Others whose life circumstances have changed in some way may owe taxes they weren't anticipating.

Those who get a bill may receive it as a nasty shock. What should you do if you can't afford to pay?

While that situation doesn't feel great, don't panic. There are things you can do to meet your obligations to the IRS without emptying your pockets right then and there.

If you can't pay, you should still file

Before we move into a discussion about what to do regarding the bill you can't pay, let's start with an important public service announcement: Even if you can't afford your tax bill, you should still file your return by the deadline.  

If you don't, the IRS can charge you a failure-to-file penalty, which will only make that forbidding bill of yours even bigger.

It's also crucial to contact the IRS when you file to let them know that you need to discuss a payment plan for your tax bill. If they don't hear from you and don't receive your payment, they can charge you a late payment penalty … just watch your bill grow.

The IRS will work with you

Here's the good news for those who owe taxes in April: The IRS — despite its reputation — is not an uncaring and unapproachable institution. The agency will work with you to set up a payment plan for your taxes owed, with the goal of helping you meet your obligation with minimal hardship.

Short-term payment plan

You may qualify for a short-term payment plan, which will give you up to 180 days extra to pay the bill in full. There's no application fee for this option, but you will pay interest and a monthly late payment penalty until you've paid your bill in full.

Use the Online Payment Agreement (OPA) application or call the IRS at 800-829-1040 (individuals) or 800-829-4933 (businesses) to set up this kind of plan.

Monthly payment plan

If you won't be able to pay the bill in full within 180 days, you can seek even more relief. You might qualify for a monthly payment plan based on an installment agreement, which will allow you to make monthly payments over time.

Setting this up requires you to pay a "user fee," though low-income taxpayers may be able to get the fee reduced, waived, or reimbursed. You'll also pay interest and some penalty charges until you finish paying the balance.

You can apply for a monthly payment plan in various ways: by using the OPA application, by filling out and mailing in Form 9465, Installment Agreement Request, or by calling the numbers in the paragraph above.

Offer in Compromise

If you aren't able to pay your full tax liability or if paying the bill will create financial hardship for you, you can apply to the IRS for an Offer in Compromise (OIC). In an OIC, you and the IRS agree that a reduced amount of payment will resolve your tax bill.

The IRS will assess your financial situation carefully before deciding. This includes your ability to pay, your income and expenses, and your asset equity. If the IRS sees that there's no possible way they will be able to collect the total amount from you in a reasonable period of time, the agency will consider an OIC.

This option is not for everyone; you can see if you might be eligible using the Offer in Compromise Pre-Qualifier.

Temporary delay on collection

If you can't pay at the moment because you're looking at choosing between taxes and rent, the IRS might be willing to delay the collection of your bill until you can pay. In this case, the IRS will tag your account as "currently not collectible" until you're in a position to pay.

This does not mean the debt disappears — the IRS will periodically review your situation to see if they think you can pay the bill. And be aware that you'll keep accruing penalties and interest on your debt until you pay in full, making delay a costly prospect.

What about other ways to pay?

The combination of interest and penalties imposed by the IRS on the various payment options can add up to a pretty penny. It may be to your advantage financially to find another way of getting the money to pay in full, such as borrowing from a bank or family member.

Here are some other ways of getting the money to satisfy the Tax Man and not break the bank at the same time:

Put it on your credit card

Using a credit card can be a costly way to satisfy your tax bill since the average credit card rate is more than 16%. But there are some ways charging your tax payment can benefit you. If you just need one extra month to get the money together, using a credit card can give you that time. It can also give you rewards points if you use certain kinds of cards. If you can use a credit card with a 0% APR intro offer to pay the bill, you can buy yourself a nice, long time to pay the money back interest-free.

Borrow from friends and family

This option isn't a possibility for everybody, but don't forget to consider whether it will work for you. Maybe old Aunt Edna has a couple extra thousand dollars lying around that she could lend you to pay your tax bill. Just take the obligation to pay the money back seriously, or else you might burn some bridges with your loved ones.

Get a personal loan

There are scores of banks and online financial institutions that you can turn to for personal loans that will cover your tax bill. This can be a good option, as you may be able to get an interest rate that's lower than what you'll pay to the IRS over the course of a payment plan.

Use a home equity line of credit

Borrowing the money via a home equity line of credit (HELOC) is another good option; as with personal loans, the interest rates for a HELOC are likely to be far lower than the rates for a credit card. The only catch is that you need to have equity available in your home to qualify for this option.

Pay State Taxes First

If you owe income tax to the federal authorities, you may also owe some money to your state Department of Revenue. It's a good idea to pay the state tax bill in full if possible before you put money toward your IRS debt because your state may be less flexible about payment plans.

Regardless of how or when you end up paying both your federal and state taxes, just make sure to take care of this problem. If you try to ignore the tax bill you've received, the debt will follow you and only get worse. Tax authorities will work with you to find a solution.

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