Millions of Americans are in the midst of filing their taxes as the deadline approaches. For many people, tax time brings visions of free money and some bonus cash to travel with in the spring and summer. But for others, it’s a dreaded time of the year.
Why? Because they may owe the government some money.
The Internal Revenue Service says that it issued more than $426 billion in tax refunds and processed more than 244 million tax returns in fiscal year 2016, the latest numbers available. But it collected in excess of a staggering $3.3 trillion.
What to do if you’ve filed your taxes and find out you owe the IRS
What should you do if, upon filing your taxes, you discover that you owe money to the IRS? Well, first of all, don’t panic. Secondly, make plans to pay what you owe.
As with any sophisticated organization, the IRS offers many ways to pay. Those methods include debit or credit card, IRS Direct Pay online, the IRS2GO mobile app, E-filing, the Electronic Federal Tax Payment System or via check or money order.
Clark: ‘Absolutely, positively file your taxes on time’
Money expert Clark Howard says the way to stay out of trouble and avoid having to pay even more money than you legally owe is to make sure you at least file your taxes.
“Absolutely, positively file your tax returns on time even if you don’t have the money to pay,” he says. “Send it in, even if you have no money to send in.”
Clark says the reason you want to get something to the IRS is because of the way that taxpayers are penalized. “Here’s the deal: The penalty for failure to file is massive; the penalty for failure to pay is actually pretty small.”
What to do if you can’t pay all of your taxes
Can’t scrounge up enough to cover the whole tax bill? Clark says the IRS will work with you.
“You also can propose a payment plan to the IRS. As long as you’ll pay them the money over typically a year, they’ll approve it without any doubt,” he says.
Clark adds that even if you’ve proposed a payment plan and haven’t heard back from the agency, stick to it.
“The best news is the interest rate you owe when you pay your taxes off over time is very, very low,” he says. “So you can feel comfortable that your’e going to be A-OK with the IRS as long as you file that return and pay what you can. The big thing? Always file your return.”