HOW MUCH DO I OWE THE IRS?

After doing your taxes, or having your taxes prepared by a professional, you’ll see that you either owe money to the IRS or that you’ll be getting a tax refund. If after your tax preparation you find that you do owe, but weren’t expecting it, this could be due to an error, changes in the tax code, changes in your income, and changes in your deduction options, along with a long list of other possibilities.

If you find that you owe more on your state or federal tax return than you thought you would, the first thing you should do is check to make sure your tax return is free of errors. For example, did you accidentally input the same income twice? Did you input an incorrect filing status? Or did you forget a deduction you normally claim? If you owe the IRS money but weren’t expecting to, it’s crucial to double check your return for these types of errors.

However, you might find that you owe the IRS money even with an error-free return. New life circumstances and changes in federal tax law can affect your tax liability. Things like inheriting money, marriage, divorce, a new job, new self-employment income taxes, and deaths can cause you to owe more money to the IRS at tax time.

If you owe the IRS money, it’s always best to pay your full balance before Tax Day (usually April 15th) on the year you owe. If you can pay on time, you should do so to avoid being paying late fees. There are a number of ways you can pay the IRS, including electronically on IRS.gov (either by direct pay or by credit card), through the IRS mobile app, and through sending a check in the mail.

If you owe the IRS money but can’t pay immediately, you’ll be subject to tax penalties, which will be added to your tax balance until it’s paid in full. However, if you can’t pay in the full amount by the filing deadline, there are a number of different payment options for resolving your tax bill, which we’ll talk about in our next section.

Getting an IRS notice in the mail can be stressful, especially if you can’t pay your tax balance right away. But the worst thing you can do when you receive an IRS notice is ignored it. If you ignore early IRS notices, you run the risk of experiencing IRS actions like liens (legal claims to your property) and levies (seizure of your property).

There are also other actions the IRS can take if you ignore their notices and fail to pay your tax balance. For example, they may send an IRS agent to your home. And in rare cases, usually, in the case of tax fraud, the IRS can file criminal charges against you, which could end up resulting in jail time.

While we’ve largely talked about what happens when you ignore notices about a tax balance, you can also receive notices for failing to file entirely. If you fail to file your tax return, the IRS may send you notices in which they request you file. If you ignore these notices and do not file your return, the IRS may file a return for you. This is called filing a substitute for a return. If the IRS files a substitute for a return on your behalf, they will calculate your return for you based on your previous tax returns. If they file for you, you have no control over what’s filed on your return, which means you can miss out on valuable tax deductions or tax credits and end up owing far more than you would have if you had filed yourself.

If you receive a notice from the IRS in the mail, you should always take steps to resolve your tax issue, either by contacting the IRS yourself or hiring a professional, who you can give power of attorney to contact the IRS on your behalf.