How Do I Find Out How Much I Owe the IRS?
How Do I Find Out How Much I Owe?
Taxpayers that owe back taxes receive an IRS notice regarding payment. This notice includes the amount owed, the due date for payment, IRS penalties and interest, and basic instructions on how to respond.
IRS Penalties and Interest
Non-payment of taxes will trigger IRS penalties and interest. Taxpayers that do not pay their entire tax bill on time are required to pay the amount owed plus penalties and interest, which accrue monthly. Interest is charged at the federal short-term rate plus 3 percent and is compounded daily. If the tax return is not filed, the penalty for failure-to-file is charged at 5 percent.
On the IRS notice regarding payment of back taxes, you will find:
1. The original amount owed
2. The total penalty charged
3. The total interest charged
4. The total amount owed after penalties and interest
It is important to calculate how much you owe before and after the penalties and interest. If the IRS made a mistake in their assessment or your calculation results in a different amount, you may disagree with the IRS’ claims and inform them of your estimate; you can support your argument with written records (copy of tax return, receipts of expenses claimed for deduction, etc.). If there is substantial evidence to your claims, the IRS will adjust the amount to your estimation.
If You Lose Your Notice/Letter
If you do not have the notice or letter the IRS sent, you may obtain an account transcript to determine whether you owe something. To obtain a transcript, use the IRS Get Transcript. You may request to receive a transcript online or by mail. Send a unique request for each tax year for which you require a transcript.
An account transcript may not include the most recent penalties and interest. Therefore, it is best to pay as much you can to bring down the penalties and interest. Upon receiving payment, the IRS will communicate to you the balance owed, if any, by sending a notice/letter.
If you need any help with an IRS letter that you receive call Richard Schickel, Enrolled Agent at 520-668-3243 for your free consultation.