Can you be in good standing with the IRS if you’re unsure how much or what kind of tax liability you have? It’s easy to be blindsided by a tax bill from the IRS—but it doesn’t have to happen. Here are some useful tips for knowing when you might owe taxes and how best to handle them.
You get a letter of notice from the IRS about unpaid taxes.
The IRS will send you a letter if they decide you owe them money. The letter should include information about how much money is owed and how to pay it. If you don’t have the money, call the number listed on the letter as soon as possible so that they can help figure out a payment plan for you.
You receive a bill for the amount you owe.
If you receive a bill from the IRS, it’s best to call them. The IRS has many options to help you pay off your debt, including payment plans and rolling over balances. You should contact the IRS if you think your bill is wrong or if you cannot afford to pay in full.
Just a tip, if you are unsure on how to face the IRS, it is wise to consult with agencies that offer free tax debt relief consultations. In this way, you’ll be guided properly, and you will not be overwhelmed with the tax information and procedures to go through.
Your bank account or wages are levied.
What is a levy?
A levy is a legal confiscation of property you own to pay back taxes owed to the IRS. The IRS can put a levy on your bank account and/or wages.
What does it mean to have wages levied?
If your employer receives a Notice of Levy, they must withhold part of your wages until the debt has been settled in full or released. Contact the IRS immediately if you have an excessive amount of money withheld from your paycheck. You may need an extension on filing your return, or other particular circumstances require consideration before they will lift the levy.
What does it mean to have my bank account levied?
The IRS can take money directly from any financial institution where you have funds (bank accounts) without prior notice or court order if there are no assets available for collection through other means (e.g., tax refund offset). A Notice Of Levy instructs banks not only how much should be paid but also when payment should be made—typically within 30 days after receiving this notice from the IRS. Tax debt relief agencies are the go-to resolution for this since they can check on all your accounts and proceed with the proper legal processes when properties are already involved.
You see your tax refund was applied to your debt.
If you see that your tax refund was applied to your debt, don’t panic. You can dispute this if you don’t agree to it, but first, make sure all the other requirements are met. If they are and you still want to dispute it, follow all the steps in this guide on how to do so.
- The IRS will forward you a letter of explanation why they applied for your refund as an offset or collection against the debt owed.
- You have 60 days from when they sent this letter (or 90 days if they sent it by mail) to request an appeal of their decision and provide evidence that supports your case.[1] This is important since some people may have been unaware that there was a debt owed until after their refund had already been applied. The burden of proving lies with them, so if there is any doubt at all and there was no clear communication about whether or not an offset would happen before submitting taxes electronically.
What to do once you find out if you owe the IRS
Once you know whether or not you owe taxes, the next step is to pay them. If the IRS says you owe, then be prepared to pay in full by April 15th. However, if it’s a smaller amount and you can get it paid off sooner than that, all the better!
Ignoring the agency can lead to more significant problems down the road, including:
- Penalties and interest
- Wage garnishments or property seizures (including your home)
- A poor credit rating could prevent you from making large purchases or even buying a car
IRS Payment Programs You Can Apply
- You can request a payment extension.
You’ll be asked to pay your IRS debt in full or make monthly payments by the original due date, so you’ll need to have the money ready when that deadline rolls around. But if you don’t, don’t worry! Just ask for a payment extension and let them know why you can’t make the current deadline. Your request will then be processed within 20 days (or less if possible), and then new payment arrangements will be made based on whatever information they received from your request form.
If approved, three options are available depending on how much time remains before your first payment is due: 60 days, 90 days, or 120 days (and beyond).
- You can ask for an Installment Agreement plan.
An installment agreement is a payment program prepared by the IRS that allows you to pay off your debt in smaller installments over time.
You must meet specific criteria to qualify for an installment agreement:
- You cannot be currently under examination by the IRS or subject to any pending criminal investigation by the IRS;
- You must owe less than $50,000; and
- You must not have previously entered into an offer in compromise or been involved in any other collection alternative program.
- You can request an Offer in Compromise program.
If you’ve been stuck in a loop of financial distress, coming up with more money to pay off your IRS debt might not be very appealing. It might seem impossible. But don’t worry!
One option to consider is an offer in compromise (OIC), which allows individuals with large unpaid tax debts to settle for less than what they owe (with some restrictions). To qualify for an OIC, you must prove that paying off your debt would cause “undue hardship” on yourself or your dependents—for example, if:
- You’re currently unemployed or underemployed;
- You have other liabilities that prevent you from paying back the total amount;
- Your assets are worth less than what’s owed to them; or
- If there’s reason to believe that creditors would recover more money by selling off items seized as part of collection efforts than by taking legal action against them
Once you’ve found out how much money (if any) is owed to the IRS and what your payment options are, you should do this immediately:
Contact a tax debt relief professional for help with understanding exactly how much money is owed and how best to handle it financially. Education about this topic isn’t accessible, so having someone who knows what they’re doing is invaluable. Additionally, find out if there are any programs available through which one can reduce their debt with minimal interest payments over time.
Tax debt relief services can help you with your debts and taxes. If you need to pay off debt, or if you’ve been having trouble filing your taxes, tax experts are available to assist. These professionals will ensure your financial situation is in order so that everything is for the following year’s tax season.
It’s critical to know if you owe the IRS money, but there are ways to find and get help dealing with it.
Once you know the amount of your debt, it’s essential to pay off what you owe as quickly as possible. The IRS can garnish your wages or freeze your bank account if you don’t start paying immediately. Getting a tax debt relief from a licensed and trusted agency will not only save you from the aggressive attacks of the IRS but they will also help you gain knowledge in getting the proper tax debt resolutions.
One of the best ways to ensure you don’t owe taxes is to keep track of all your income throughout the year. Not only does knowing your income help determine whether or not you owe taxes and helps you keep an eye on how much money is going out each month. This can help you better manage your budget so that you don’t spend more than what’s coming in!
The bottom line is that knowing if you owe the IRS money is important. If you do, get help paying it off—and don’t let your debt go unpaid for too long!
