If you were looking forward to getting your big chunk of money back from the IRS this year only to find out that you actually owe money to them, you might be a little scared. Nobody wants to owe money to anyone, let alone to the IRS. If you only owe them a little bit of money, you may be able to pay it back easily, but if you owe them quite a bit, it could be a struggle. Read on for tips to help guide you through the process if you owe money to the IRS.
Get A Second Opinion
Go through your taxes and be sure you have every deduction possible to reduce your tax bill. If you've never owed before and nothing has changed for you, there could be a mistake. Get a second opinion from another tax service. If you do have changes such as you now have your own company or changed your withholding, it could mean you owe money to the IRS. Be sure you have all of your deductions, go over your receipts, and go through your taxes with a tax service like Balkcom Pearsall & Parrish CPA's PA.
Schedule A Payment Plan
If you owe a lot on your taxes and don't have the money in your bank account to pay it back all at once, you're going to need to schedule a payment plan with the IRS. Failing to do so and failing to pay your taxes before April 15th can result in penalties and fees added on. Don't ignore your tax bill; it can only make things worse for you.
Try To Borrow Money
If you don't owe that much money, you may be able to borrow the money to pay your tax bill instead. Try to borrow money from a family member or from a friend, or try to take out a low-interest loan. It may be easier (and cheaper) for you to pay back someone rather than paying the extra fees the IRS may tack on to your tax bill. Don't borrow from someone unless you can actually pay them back though; there's no reason to burn relationships over money.
Now that you see why you owed money on your tax bill this year, it's time to make some changes. Adjust your withholding so you won't owe again. If you aren't sure how to do this, you can talk to your accountant to help you figure this out. Also if you owed because you recently became self-employed, you should pay your taxes quarterly and be sure to put money away to help pay for your taxes.
If you are surprised by a tax bill this year instead of a tax refund, don't stress too much. Call the IRS to schedule a repayment plan and make the necessary changes to prevent this from happening next tax season.