21% of taxpayers in the U. S. are expected to owe the Internal Revenue Service (IRS) money in the 2019 tax season.
With the recent changes the Treasury Department and the IRS made to reflect the new Tax Cuts and Jobs act, many taxpayers are set to owe more taxes.
For example, these changes bring an end to personal exemptions. Every taxpayer needs to ascertain how these alterations will affect their tax liability. Come tax season, and many people will be asking, “How much do I owe the IRS?”
It is essential that you know exactly how much you need to pay the IRS to avoid serious repercussions. Here are the ways you can find out what Uncle Sam is expecting from your paycheck.
IRS Online Tool
The IRS now offers an online portal where taxpayers who are wondering how to check IRS balance can work out their back taxes.
The tool displays your balance for each tax year. The balance comprises of the principal amount you owe plus any penalties or interest that have been charged to your account.
If you have made any payments in the last 18 months, it will reflect on the online tool.
You will find the specific amounts you have paid shown along with the dates you made for each payment.
Should you log in and find that a recent payment you made isn’t being shown, you don’t need to worry.
The online tool takes between one to three weeks to update any payments you make on penalties and interest owed.
To enable you to log in and use the tool, the IRS uses a two-factor authentication program dubbed ‘Secure Access.’
When you want to use the online tool you will need your date of birth information and your social security number.
In addition, you will need your filing status (married filing jointly, single, etc.) and the mailing address from your last return. These two pieces of information are to help verify your identity.
Finally, you will need an account number from your credit card, car loan, mortgage or home-equity loan.
Note that the IRS will request a credit report to verify you but it will not affect your rating.
The online tool also allows you to print a transcript if necessary. If you prefer having the IRS mail it to you instead, you can place the request but it will take five to ten days to arrive.
Request a ‘Record of Account’
If you file your taxes with a different form other than form 1040, you will need to apply for a ‘record of account’ to get further information.
Form 4506-T, titled ‘Request for Transcript of Tax Return’ form, is the one you will use. It will help you access your total tax liability, payments, and adjustments for a particular year.
The Record of Account will give you information on any balances you might have for each tax period.
Take care to not confuse form 4506-T with form 4506. The latter is necessary when you want to get a full copy of a tax return and any attachments that date back more than four years.
Form 4506-T, on the other hand, will give you a summary of account transcripts and tax returns with information for the current year plus three more years. It will also show the summary of a Record of Account.
To request your IRS Record of Account and transcript, download form 4506-T or call the IRS and ask them to send it to you.
Consult a Professional
A tax professional has the experience to help you resolve your back taxes problem.
Through a power of attorney, they can act on your behalf and use their relationships at the IRS to help you find out how much you owe.
A tax professional can go one step further than just finding out what you owe and advise you on how to best resolve it.
They can give you advice on how far back the IRS can go to recover unpaid taxes and even negotiate on your behalf for a friendly payment plan.
Call or Visit Your Local IRS Office
The IRS has offices spread out across the country and you can walk in or call the nearest one in your area.
Beware that when you walk into their offices they will direct you to solve your back taxes in a specified manner.
Thus, as a precaution, you should speak to a tax professional to ensure that your interests are taken care of.
The IRS office should be able to provide your Record of Account or your transcripts when you arrive.
Alternatively, you can get in touch with the national office to request them. It will take between one to three weeks for the records to arrive from the national office.
Don’t Make the Same Mistake Again
Dealing with back taxes can be time-consuming and stressful. Once you are clear of any tax debt you should not make the same mistake again. Here are some ways you can avoid owing back taxes.
1. Adjust Your Paycheck Withholding
If the amount being withheld from your paycheck is little, you can adjust it to pay more taxes.
Create a new form W-4 and make changes that will get allow for more taxes. For example, you can claim fewer dependents if necessary.
Once you are done, take the new W-4 form to your employer’s payroll department and not the IRS.
2. Withhold Taxes from Non-Wage Income
It is possible for you to voluntarily initiate payment of taxes from non-wage income.
If you have any government benefits like unemployment benefits, complete the W-4V form on the IRS site. Send the completed form to your employer and not the IRS.
While it might squeeze your cash flow to pay taxes from non-wage income, it is a better proposition than a big tax bill next time.
How much do I owe the IRS?
The recent changes brought about by the new Tax Cuts and Jobs act pose a challenge for some taxpayers. You might end up paying more to the IRS if the changes adversely affect your tax liability.
In the face of these changes, you might find yourself grappling with the question of, “How much do I owe the IRS?” If you are unclear about what you need to pay, you should talk to the IRS to avoid back taxes.
Precision Tax Relief knows what the burden of unpaid taxes feels like. Contact us today for a free consultation to help you know how to resolve your tax debt.