What To Do When You Owe Back Taxes

If you are wondering what to do when you owe backtaxes,the answer is you will have to pay them back. However,the IRS is lenient when it comes to allowing a payment plan,and it’s possible to pay back your taxes over a period of several years.
Even if you know you owe back taxes,you still have to file your taxes as you normally would; don’t just do nothing. The IRS can garnish wages or take other collection action although that can be avoided as long as you communicate with them. After you have filed your taxes,the IRS will send you a statement detailing the outstanding amount and at that point you have two options,to either pay back the entire amount by the deadline or arrange a payment plan with the IRS.

If you choose the payment plan option,the IRS will work with you to come up with a term for the loan and a payment schedule that works for you. You can choose your own payment sue date and the amount you need to pay back each month. Of course,it’s also possible to pay more than the minimum amount and therefore pay off the outstanding balance sooner. All of this can be done online,meaning you don’t even need to talk to anyone.

When you file the taxes for the following year,any refund due to you will automatically be applied against any outstanding balance you still have. And if you owe money again,the procedure is basically the same,although the amount owed will be rolled over into the previous amount. You’ll have a higher amount due and your monthly payments will increase,but it will still only be considered to be one loan. It’s worth taking steps to adjust your withholding so that this doesn’t happen repeatedly.

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