---
title: Tax Debt During a Medical Hardship: 2026 Guide | TaxTruce
url: https://taxtruce.com/health/medical-hardship
updated: 2026-10-29
---

# Sick and can't pay taxes?

Illness can matter to penalties and collection.

Updated October 8, 20264 sources[Fact checked](/editorial-standards)

The short answer

## What should I do about tax debt during a medical hardship?

A serious illness can be a reasonable cause to remove late filing or late payment penalties. If you can't cover basic living costs, the IRS may pause collection or release a levy for hardship.

**Death, serious illness or unavoidable absence of you or your immediate family can be reasonable cause for penalty relief.**[Source: IRS: Penalty relief due to reasonable cause](https://www.irs.gov/payments/penalty-relief-due-to-reasonable-cause)

Reasonable cause is decided case by case. You must show you used ordinary care and still couldn't file or pay on time.

The IRS must release a levy if it keeps you from paying basic, reasonable living costs.

If you take a retirement withdrawal before 59 and a half, medical costs over 7.5% of your income may avoid the 10% extra tax.

## Key facts

* Dates of the illness and the missed deadlines
* Records from doctors or hospitals
* Your monthly basic living costs
* Any active levy
* Any early retirement withdrawals

## Options that may help

**Penalty relief**

Ask for reasonable cause relief by phone or with Form 843.

**Levy release for hardship**

Call the number on the levy notice right away.

**Currently not collectible**

A pause in collection while money is too tight.

Results depend on your situation. Not every case qualifies.

## Common questions

Is lack of money a reasonable cause?

Not by itself. Other facts that show you tried to comply may help.

Source: [IRS: Penalty relief due to reasonable cause](https://www.irs.gov/payments/penalty-relief-due-to-reasonable-cause)

Do penalties stop in CNC status?

No. Penalties and interest keep adding up until you pay in full.

Source: [IRS: Temporarily delay the collection process](https://www.irs.gov/businesses/small-businesses-self-employed/temporarily-delay-the-collection-process)

## Sources

1. [IRS: Penalty relief due to reasonable cause](https://www.irs.gov/payments/penalty-relief-due-to-reasonable-cause)
2. [IRS: How do I get a levy released?](https://www.irs.gov/businesses/small-businesses-self-employed/how-do-i-get-a-levy-released)
3. [IRS: Temporarily delay the collection process](https://www.irs.gov/businesses/small-businesses-self-employed/temporarily-delay-the-collection-process)
4. [IRS: Topic 558, Additional tax on early distributions](https://www.irs.gov/taxtopics/tc558)

General information, not tax or legal advice. You can contact the IRS yourself for free at [irs.gov](https://www.irs.gov).

Run the numbers with our [free tax tools](/tools), like the penalty and payment plan math.