It’s not unusual to feel a bit nervous if your tax bill is out of reach, especially in the wild world of crypto. Markets can rise, creating impressive gains, but when the dust settles, you might not have enough cash in hand for the tax man.
Let’s look at different scenarios that capture what many crypto investors face when the numbers don’t add up at filing time.
Use our free crypto tax calculator.
Scenarios where you may not be able to pay crypto tax
Money problems can come out of nowhere, and it’s certainly unsettling to owe more than you can pay. These situations pop up often for folks dealing in digital assets.
You owe $50,000 or less including penalties and interest
When your balance, counting penalties and interest, is $50,000 or under, you might be a candidate for a longer online payment plan. This setup allows you to chip away at your debt over a period that can stretch up to five years. Penalties and interest will continue adding on until you settle in full, but you at least avoid the immediate hit of a large lump sum.
You owe $100,000 or less including penalties and interest
For debts up to $100,000, the short-term online payment plan is an option. With that plan, you typically have 180 days to pay off what you owe. You’ll still see interest and penalties accrue, though some prefer a quicker resolution rather than going the multiple-year route.
You owe more than $100,000 including penalties and interest
If you exceed the six-figure mark, the IRS will ask you to submit Form 9465 (Installment Agreement Request) along with Form 433-F, which details your financial situation. You may choose to work with an attorney who specializes in tax controversies. Professional guidance can be valuable if you’re trying to negotiate terms with the IRS.
On the crypto side, our crypto tax professionals are available to advise you.
You owe between $50,000 and $100,000 but can’t pay within 180 days
You could be under the $100,000 threshold yet need more than six months to settle your bill. In that case, you’ll follow steps similar to those who owe over $100,000. This means requesting an installment agreement and sharing relevant financial details. You may be asked to show proof you truly need a lengthier schedule.
Your tax liability is greater than the sum total of your assets
Sometimes the amount you owe dwarfs everything you own—home, car, and other possessions included. If that applies, you could explore an offer in compromise, which lets you potentially pay less than the full total. Not many qualify, but if your situation is extreme, a tax controversy specialist can help figure out whether you might meet the criteria.
Payment options by the IRS may help you out
Seeing a big balance owed to the IRS can be unnerving, but at least there are official payment plans you can use. If you can clear your balance within six months, there’s a short-term plan. If you expect it’ll take more time, consider a longer arrangement, which can stretch up to five years.
Both types come with added fees and continuing interest until you’re done paying. You can usually apply through the IRS website, making the process more straightforward than many people expect.
Calculate your crypto gains with our free crypto profit calculator.
What Happens if You Don’t Report Cryptocurrency on Taxes in 2025
Skipping crypto details on your tax return can lead to serious repercussions, such as fines or even legal trouble. Simply put, it’s not an option.
If you’re curious about what may happen when someone doesn’t report digital transactions, read our piece: What Happens if You Don’t Report Cryptocurrency on Taxes.