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.

If you have a balance due, 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.

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Has someone stolen your identity?

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:

  • You receive a balance due notice;
  • Your refund was used to pay another debt; or
  • The IRS is taking or took a collection action taken against you for a tax year in which you received a refund or didn’t need to file a return.

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.

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Do you believe your IRS account doesn’t show all of the payments you’ve made to the IRS?

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.

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Do you have a balance due each year because you don’t have enough withholdings taken from your payroll check each pay period or you haven’t made enough estimated tax payments?

You must pay taxes as you earn or receive income during the year, either through withholdings or estimated tax payments.

Taxes taken from your payroll check (withholdings)

You can make changes to the amount your employer withholds from each of your paychecks by filling out an IRS 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.

The withholding calculator may help you compute your withholdings.

Estimated tax payments for self-employed taxpayers (usually business owners)

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.

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Do you need to make a change to a tax return you’ve already filed with the IRS?

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.

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Did you file your tax return or pay your taxes late? 

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:

  •  Reasonable Cause – You have a reason for not filing or paying on time such as:
    • You exercised ordinary business care and prudence to determine your taxes.
    • You had matters beyond your control that left you unable to file or to determine the amount of deposit or tax due.
    • You didn’t receive necessary financial information.
    • You didn’t know you needed to file a tax return even though you made efforts to find out.
    • You had a death in your immediate family.
    • You or a member of your immediate family suffered a serious illness that kept you from handling your financial matters.
    • You lost your tax documents in a fire or some other disaster.
  •  First-Time Penalty Abatement – You may qualify for administrative relief from penalties for failing to file a tax return, pay on time, or deposit taxes when due, under the IRS's First-Time Penalty Abatement policy if the following are true:
    • You didn’t previously have to file a tax return or you have no penalties (except the estimated tax penalty) for the three tax years prior to the tax year in which you received a penalty.
    • You filed all required tax returns or filed a valid extension of time to file.
    • You paid, or have arranged to pay, any tax due.

 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.

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Did you file a tax return with your spouse and all or part of your refund was applied to a debt only your spouse owes?

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 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.

As an injured spouse, you can request your part of the tax refund by filing IRS Form 8379, Injured Spouse Allocation, using the instructions for this form.

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Do you owe tax because your spouse didn’t report deductions or didn’t include income on your joint tax return?

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 IRS Form 8857, Request for Innocent Spouse Relief, using the instructions for this form.

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Did the IRS audit (examine) your tax return?

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 reconsideration process.

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Did the person who prepared your tax return change your tax return information without your permission?

The first indication that you’re a victim of a dishonest preparer 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.

If you’re the victim of return preparer fraud or misconduct, you’ll need to demonstrate it to the IRS by following certain steps found within the return preparer fraud information

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Are you financially unable to make any payment at this time?

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.

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Would you like the IRS to consider accepting only part of what you owe?

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:

  • Doubt as to Collectability: This means you don’t have enough income or assets to pay your debt in full. If the amount owed is correct, but you can’t afford to pay all of it, you can prepare and file an offer using the IRS Form 656B, Offer in Compromise Booklet.
  • Effective Tax Administration: You can pay your full debt, but it would create an economic hardship, or would be unfair or inequitable.

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 IRS Form 656-L, Offer in Compromise (Doubt as to Liability).

You may use the IRS’s Offer-in-Compromise 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.

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Would you like to make payment arrangements?

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. 

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Is the amount you owe causing you a financial hardship or have you contacted the IRS and haven’t been able to resolve your tax issue?

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.

To speak to an advocate, call (877) 777-4778 or find your local TAS office.

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, appeals, tax collection matters, 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.

Last modified February 8, 2018