How to Know If You Owe the IRS Taxes

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It's never a good feeling knowing that you owe money to the Internal Revenue Service. Due to the interest charges and penalties that the IRS charges on back taxes, however, it's best to resolve any financial obligations to the IRS as soon as possible. There are two ways to determine if you owe taxes to the IRS. The first process is simply to call the agency. The second way is to prepare a tax return for the current tax year, as well as any other tax years for which returns have not been filed.

Things You'll Need

  • Computer with Internet access
  • Telephone
  • Taxpayer’s personal information (including Social Security number)
  • Completed tax returns
  • Contact the IRS by phone at (800) 829-1040, or in person at a local IRS office (see link in Resources section). Be prepared with the taxpayer's personal contact information and Social Security number. The hours of operation for the IRS’s telephone assistance center are 7 a.m. to 10 p.m. Monday through Friday. These hours are based on the taxpayer's local time.

  • Ask the IRS representative whether there is a balance owed on the tax account for any previous year. The representative can provide information on the total balance owed, as well as a breakdown of the periods from which it is owed. Payment plans can also be made by phone, and so long as there is an accepted payment plan in place, the IRS will take no further action. If the taxpayer agrees to a payment plan, the IRS will follow up with a letter by mail confirming the agreed-upon monthly payment amount.

  • Prepare tax returns for the current year and any previous years that have not been filed. Taxpayers who are uncomfortable preparing their own tax returns should seek professional assistance. The IRS also offers free help preparing tax returns at local assistance centers.

  • Check whether tax is owed to the IRS for the current tax year, or previous years if applicable. The lines above the signature lines on the tax return form indicate whether a tax refund is due, or whether money is owed to the IRS.

  • Add the total dollar amounts from Steps 2 and 4 to determine the total amount of taxes owed to the IRS.

Tips & Warnings

  • As of 2012, the current minimum monthly payment for back taxes is $25. Depending on the taxpayer's specific circumstances, and ability to pay, a higher minimum monthly payment may be required to lock in a payment plan with the IRS.
  • If the full amount of taxes owed can't be paid at once, the IRS encourages taxpayers to pay as much of the balance as possible and then contact the IRS for payment arrangements.
  • When sending in a prior year's tax return on which money is owed to the IRS, either call the IRS at (800) 829-1040 to find out what the penalty and interest are, or pay these charges separately, after receiving notification of their amounts by mail from the IRS. If a refund is due on a prior year's tax return, there are no penalty and interest charges. As such, the full amount of the refund will be sent to the taxpayer (provided that there are no back taxes owed for other tax periods).
  • Failure to pay back taxes owed to the IRS can result in wage garnishments, penalties, interest charges and property liens and levies.

References

  • Photo Credit tax time image by Gale Distler from Fotolia.com
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