Owe the IRS Money? Two Tips to Help You Get Through It

There are few things that can be as disheartening as opening the mailbox and finding a letter from the Internal Revenue Service (IRS).  You open it, only to read that you owe back taxes to the IRS.  Experiences such as this one can be very difficult to deal with, especially if it seems to be an astronomical sum that you just can't afford at the moment.  Rather than going into panic mode, use this information to learn more about what you should do when you owe money to the IRS.

Don't Ignore It

If your first instinct is to ignore the letter and pretend that it doesn't exist, fight this feeling.  The last thing you want to do is stash a letter from the IRS away in hopes of never seeing it again.

Understand that the IRS is a very powerful agency.  If they've determined that you haven't paid your fair share of taxes, they have the means to recoup these funds.  Whether this means that they start to garnish your paychecks or take money out of your bank account, they're going to do everything in their power to make sure they get the money that is owed.

That's why it's vital that you don't ignore a letter from the IRS.  The moment you receive the letter, pick up your telephone and call the toll-free number that is listed on the form.  Talk with a representative and see if it's possible for you to set up a payment arrangement.  You may be pleasantly surprised at just how willing the agency is to work with you to get the debt paid down.

Be Prepared to Re-File Your Taxes

Another thing you should do when you own money to the IRS is be prepared to re-file the taxes from a previous year.  There could be a mistake on the part of the IRS that has you owing money that you actually shouldn't be on the hook for.  Don't just accept the decision at face value because it's coming from the IRS.  Go back through your records and find the wage and earning statements from the years that the IRS is saying that you fell short.  Take them to your tax preparer and have the taxes done over to make sure the numbers line up.

Owing the IRS doesn't have to be the end of the world if you just know what to do.  The next time you owe money to the IRS, keep these tips in mind so you can get through the situation.

About Me

how a tax preparer could improve the outcome

Do you prepare your own taxes each year? Have you received letters months after you have filed your taxes and spent your return telling you that you have made an error and that you owe the IRS a check to cover the discrepancy? This is something that has happened to me four times in the past eight years. Because of small errors, I have had to come up with money that I had to pay back and it made things more difficult than you might think. Since the last time, I have been paying to have my taxes prepared professionally and it has actually helped a lot. Find out what a difference a professional tax preparer could make on your taxes this year here on my blog.