Does lack of money count as reasonable cause for not paying taxes?

Generally no. The IRS does not consider a simple inability to pay as reasonable cause for the failure-to-pay penalty. However, if the inability to pay was caused by circumstances beyond your control — such as a sudden medical emergency that depleted funds, a natural disaster, or theft of the funds set aside for taxes — that specific cause may support a reasonable cause claim. Simply not having enough money without an extraordinary triggering event typically does not qualify.

What documentation do I need for a reasonable cause request?

Documentation should directly support the cause you are claiming and the timeline. For illness: hospital records, doctor's letter with dates of incapacitation. For natural disaster: news coverage, FEMA declaration, insurance claims. For destroyed records: fire department or police report. For IRS error: correspondence showing the IRS provided incorrect written advice. The documentation should clearly show that the cause directly prevented you from filing or paying on time and that you acted promptly once the obstacle was removed.

Should I request First-Time Abatement or reasonable cause if I qualify for both?

Request both in the same submission if you qualify for FTA — the IRS will apply FTA first since it does not require supporting documentation and can be granted faster. If FTA is not available (for example, you had prior penalties), then submit the reasonable cause request with full documentation. If you request reasonable cause but qualify for FTA, the IRS will apply FTA automatically.

What is reasonable cause abatement?