I Need Help Resolving My Balance Due
Do you have a balance and need help resolving it? There are many reasons why someone would owe the IRS a balance due amount. You may find the information below helpful in resolving your balance.
Identity theft is a fraud that is committed or attempted, using a person’s identifying information without permission. It may involve stealing someone’s Social Security number (SSN), name, bank account, or credit card numbers, and then using that information.
You may find out you’re a victim of tax-related identity theft when you try to file your tax return or start getting notices from the IRS about your tax account. The most common signs that indicate you may be a victim are:
There are several steps you may need to take as outlined in the Taxpayer Guide to Identity Theft. The right ones for you are based on what’s happening with your individual tax account.
If you believe your IRS account doesn’t show one or more payments you’ve made, it’s best to start with a transcript of your account. Before contacting the IRS, first check with your financial institution to verify whether the check has cleared your bank account. You can also request a tax account transcript which will show all of the payments the IRS has received on your account.
If you notice that a payment you made hasn’t been applied to your account, you can contact the IRS toll-free line at 800-829-1040 to ask the IRS to look for your payment. When the IRS processes payments, they include certain numbers on the back of your cancelled check. The IRS may ask you for information from the back of your cancelled check – have it ready when you call the IRS.
You must pay taxes as you earn or receive income during the year, either through withholdings or estimated tax payments.
Sometimes you realize after you filed your return that you made a mistake. If you made a mistake on your return, filing an amended return, IRS Form 1040X, to correct the error may lower the amount you owe. You may use the step by step instructions to help you fill out the amended return. It’s very important that you have information from the original return you filed before you complete the amended return. If you don’t have a copy of your return, you can request a transcript.
Your tax return can be incorrect or incomplete for many different reasons; from simply forgetting to sign a form to not reporting income or incorrectly calculating a credit. It can also happen because of various errors when filing electronically.
Depending on the nature of the error you need to fix and when you realize you need to change your return, there are different ways to fix an incorrect or incomplete return.
You can make changes to the amount your employer withholds from each of your paychecks by filling out an Form W-4, Employee’s Withholding Allowance Certificate, and giving it to the person who takes care of your payroll. The reason you complete an IRS Form W-4 is so your employer can withhold the correct federal income tax from your pay. You should consider completing a new IRS Form W-4 when your personal or financial situation changes.
New Tax Reform implementation changed the way the IRS calculates your federal tax. The IRS encourages everyone to perform a quick “paycheck checkup” to ensure you have the right amount withheld.
You may use the IRS withholding calculator to figure your federal income tax and withholding. The withholding calculator is a tool on IRS.gov designed to help you determine how to have the right amount of tax withheld from your paychecks.
When you use the withholding calculator, it will help you determine if you need to adjust your withholding and submit a new Form W-4, Employee’s Withholding Allowance Certificate, to your employer.
If you’re subject to self-employment (SE) tax and income tax, you’re generally required to make estimated tax payments quarterly to the IRS. It’s important to look at your business profit and loss during the year to find out if you need to make estimated payments. If it looks like you’ll owe SE tax at the end of the year, you’ll likely need to make quarterly estimated tax payments.
You can use IRS Form 1040-ES, Estimated Tax for Individuals, to figure your estimated tax. You could be subject to a penalty if you don’t have enough withholding or estimated payments on your account.
If you filed your tax return or paid your taxes late, the IRS may have assessed one or more penalties on your account. In some cases, the IRS will waive the penalties for filing and paying late. However, you’ll need to ask the IRS to do this. The IRS will usually consider the following:
This list doesn’t include all possible reasons. Be prepared to explain to the IRS what issues you faced and why they caused you to file your tax return or pay your taxes late. You should also be prepared to show the IRS you’ve corrected the situation, and you won’t have problems filing and paying on time in the future.
You’re an injured spouse if you filed a joint income tax return and all or part of your share of the joint refund was (or will be) applied against a legally enforceable past due debtThe IRS applied all or part of taxpayer’s refund to pay another tax debt. that belongs just to your spouse. The past due amount can be a federal debt, state income tax debt, state unemployment compensation debt, or child or spousal support payments.
When you file a joint tax return, you and your spouse are each individually responsible for the tax, penalties, and interest that arise even if you later divorce. Under certain circumstances, you may not have to pay the amount owed to the IRS.
If you and your spouse or former spouse owe a balance because he or she improperly reported deductions or didn’t report income, then you may request relief from all or part of the liability.
You may qualify for innocent spouse relief from the joint balance if you didn’t know or have reason to know of the improper reporting or omission; you’re divorced, separated, or no longer living together; or it wouldn’t be fair to hold you responsible for the tax under the circumstances. To request Innocent Spouse Relief, file Form 8857, Request for Innocent Spouse Relief, using the instructions for this form.
If the tax you owe is because of an audit you didn’t know about or weren’t able to provide any information for, you might be able to ask the IRS to take another look at your records through the audit reconsiderationProcess used by the IRS when the taxpayer disagrees with the results of an audit of a tax return; taxpayers can request an audit reconsideration when the balance due from the audit remains unpaid. process.
The first indication that you’re a victim of a dishonest preparerAn individual hired by taxpayers to prepare and sometimes file their taxes. might be correspondence from the IRS. For example: An IRS notice may alert you to a mistake on your tax return or that it’s being audited. Another way you might find out is if a transcript of your account doesn’t match the tax return you signed.
There are times where you agree with the IRS that you owe taxes, but you can’t pay due to your current financial situation. If the IRS agrees that you can’t pay both your taxes and your reasonable basic living expenses, it may place your account in Currently Not Collectible (CNC) (hardship) status.
If the IRS agrees to place your balance due accounts in this status, it doesn’t mean the balance goes away. It simply means the IRS won’t pursue collection actions while your account is in this status. Unfortunately, penalties and interest continue to accrue by law. If paying anything to the IRS, even the smallest amount, will make you unable to pay your reasonable basic living expenses, talk to the IRS about placing your accounts in this status. The IRS will ask you about your income and expenses so be prepared to have a discussion with them about how much money you earn or get each month compared to how much you spend.
An Offer in Compromise (OIC) is an agreement between you and the IRS, where the IRS agrees to accept less than the full amount you owe. There are two main reasons the IRS may agree to accept less than the full amount you owe:
Another reason the IRS may accept payment of less than the full amount of tax owed is doubt as to liability (that is, you don’t believe you owe the tax, or you don’t believe the amount is correct). If you believe you don’t owe tax or the amount is incorrect, you can submit Form 656-L, Offer in Compromise (Doubt as to Liability).
You may use the IRS’s Offer-in-CompromiseAn agreement between a taxpayer and IRS for a taxpayer to pay less than the full amount owed. Pre-Qualifier tool to see if you qualify for an OIC.
Note: Except in the case of a doubt as to liability OIC, there is an application fee to apply for a OIC, and you must also send in an initial payment when you submit the offer. You may qualify for a Low Income Certification, if your gross monthly household income is less than a certain amount as shown in the IRS Form 656, Offer in Compromise. The certification is based on your family size and where you live. If you qualify, you’re not required to pay the application fee or to submit any payments with or during the consideration of your offer.
It’s in your best interest to pay your tax debt as soon as possible because paying can limit the penalties and interest the IRS may charge.
However, if you currently can’t pay your taxes in full, the IRS offers a number of payment options. Depending on the type of tax you owe, and how much, different options are available, ranging from short term extensions, to installment agreements, to an offer in compromise. Each has different requirements and fees.
If you have a balance dueThe outstanding amount a taxpayer owes on an account., don’t delay in trying to resolve it. Sometimes, the timing of your actions is very important and you don’t want to miss a deadline and lose certain taxpayer rights. You have many options depending on why you owe the IRS and how best to take care of it – see the How will this affect me? section below.
Sometimes, it’s as simple as contacting the IRS to discuss your balance due or asking for a transcript of your account to see why you owe the IRS.
If you’re having a tax problem that you haven’t been able to resolve on your own, the Taxpayer Advocate Service (TAS) may be able to help. As an independent organization within the IRS, TAS protects taxpayers’ rights under the Taxpayer Bill of Rights, helps taxpayers resolve problems with the IRS, and recommends changes that will prevent the problems from happening in the future.
You may be eligible for help if your IRS problem is causing financial difficulty or you believe an IRS procedure just isn’t working as it should. Read more about the kinds of cases TAS works.
TAS has offices in every state, the District of Columbia, and Puerto Rico. If you qualify for help, you’ll be assigned to one advocate who will be with you at every turn. TAS advocates work with the IRS to get your problems resolved and our services are always free.
Do you feel that you need help from a tax professional but can’t afford one? Low Income Taxpayer Clinics (LITC) can represent you before the IRS or in court on audits, appealsConference with a technical Appeals employee to discuss IRS actions to resolve the tax liability., tax collection mattersA taxpayer receives notices of balance due, request for payment, and IRS intent to levy if payment is not received., and other tax disputes. Services are provided for free or for a small fee. The LITC assists low income individuals who have a tax dispute with the IRS, and provides education and outreach to individuals who speak English as a second language (ESL). In order to qualify for assistance from an LITC, generally a taxpayer’s income must be below a certain threshold, and the amount in dispute with the IRS is usually less than $50,000.
To speak to an advocate, call (877) 777-4778 or find your local TAS office.
Use this tool to see if you may be eligible for an offer in compromise (OIC).