There have been a lot of stories about surprised taxpayers this year, and many of those surprises were decidedly unpleasant. Taxpayers who had received large refunds for years were shocked to find that they owed the IRS money this year, sometimes thousands of dollars in additional taxes due.
Still others were shocked to find an IRS notice in their mailboxes – a formal letter detailing an additional tax liability and demanding payment for taxes due. These IRS notices can leave even the most conscientious tax filer blindsided – and wondering what to do next.
Whether you expected a refund and received a bill or found a notice from the IRS lurking in your mailbox, what you do next matters a great deal. Here are some critical steps to take if you owe money to the IRS, but before we jump in, we encourage all readers facing a tax problem to contact us for a free consultation.
There is no scarier piece of mail than a notice from the IRS, especially if that notice comes with a big tax bill attached. Even so, a notification of additional taxes due is no excuse to panic and worrying will not make the problem go away.
So calm down, think rationally and plan your next steps carefully. There are right and wrong ways to address the issue, and the steps you take next could make all the difference.
Double-Check Your Math and Gather Your Documents
Something as simple as a transposed number or mismatched form could trigger a notice from the IRS, but the good news is these problems can be easy to resolve. Before you do anything else, go back to your original documents and double-check your numbers.
Compare the 1099 forms and W2s you received with the numbers you entered on your return. If there are inconsistencies and errors, you may be able to simply file an amended return and resolve the issue.
Contact A Tax Resolution Firm
Your tax preparer can be a big help when you receive an audit notice or demand for additional taxes from the IRS, but chances are they won’t know how to negotiate with the IRS nor will they fully understand your options for tax relief.
Working with a firm that specializes in tax debt relief and tax resolution, you’ll be able to map out a plan to get your back taxes taken care of.
Ask About Possible Penalty Forgiveness
Changes to the tax code have left many taxpayers owing money to the IRS when they expected to be cashing big refund checks. The limitations in the deductibility of state and local taxes, coupled with updates to the withholding tables, have left millions of taxpayers in this situation.
The IRS has taken notice, and the tax agency has been waiving underpayment penalties and interest for many of the affected taxpayers. If you are completing your tax return and find that you owe money to the IRS, contact the agency (or ask our firm) about possible waivers for part of the amount due. You will still be responsible for the taxes you owe, but you may be able to get relief from any penalties and interest.
Seek Payment Arrangements with the IRS
Owing money to the IRS is frightening, but the tax agency is not entirely lacking in compassion. The IRS knows that many taxpayers will have trouble making their payments in full, and the agency may be willing to set up a more affordable payment plan.
If you receive a surprise tax bill you should try to pay what you owe, assuming it’s correct and your tax preparer already lowered your tax liability to the lowest amount allowed by law.
If you are unable to pay what you owe, contact our firm and we can help you setup a properly structured payment plan that can save you a lot in the long run.
Keep in mind you could be on the hook for additional penalties, as well as interest on your outstanding balance.
Owing money to the IRS is scary and having a large tax liability can wreak havoc with your finances and your life. Even so, there are things you can do to ease the burden, so you can pay what you owe and send the IRS on its way. The steps outlined above can help you get a handle on the situation, so you can rest easy and stop worrying about your tax bill.
If you want an expert tax resolution professional who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.