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If you owe back taxes and can’t pay, file on time, pay what you can, stay current on this year's taxes and explore IRS options like installment agreements or an Offer in Compromise to avoid penalties and collection actions.
Every year, taxpayers face the same question: should you file your taxes as soon as possible, or is it smarter to wait until closer to the deadline? The short answer is that filing early is best for most people, but waiting can make sense if your income is complex, documents aren’t complete, or you need extra time to plan strategically. Ultimately, the key isn’t speed. It’s accuracy, timing, and managing risk.
[Editor's Note: This article was originally published in February 2014 but has been updated for accuracy and comprehensiveness.]
If your tax refund was lower than expected (or you ended up owing the IRS) you may not be withholding the right amount of federal tax from your paycheck. On the other hand, if your refund was unusually large, you could be having too much tax withheld, reducing your take-home pay throughout the year.
Owing taxes to the IRS can be stressful...especially when the balance is substantial and interest and penalties are adding up. Fortunately, the IRS offers options that make it easier for qualified taxpayers to manage or resolve tax debt without digging deeper into financial hardship.
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Audit representation is professional assistance provided by a tax expert to guide you through an IRS audit. Hiring an experienced representative can save time, reduce stress, and help you navigate complex tax laws to protect your finances.
[Editor's Note: This article was originally published in September 2013 and has been updated for accuracy and comprehensiveness.]
A tax lien withdrawal removes the IRS Notice of Federal Tax Lien from public record as if it never existed. A tax lien release shows the debt was paid, but the lien remains in public record as “released.” Withdrawals offer a cleaner outcome and are available after payment in full or sometimes through a direct debit installment agreement.
[Editor's note: This article was originally published in July 2018 but has been updated for accuracy and comprehensiveness.]
If you owe the IRS $51,000 or more, unpaid taxes could put your ability to apply for or use a U.S. passport at risk. Thanks to the FAST Act (Fixing America’s Surface Transportation Act), the State Department can deny or revoke passports for taxpayers with seriously delinquent tax debt. Understanding how the FAST Act works—and how to resolve your tax debt—can help protect your passport and your ability to travel internationally.
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What happens if you fail to file your tax return?
The IRS charges a failure-to-file penalty of 5% of unpaid taxes per month, up to 25% of your balance. If your return is over 60 days late, you may owe a minimum penalty of $485 or 100% of your unpaid tax. Filing as soon as possible reduces penalties, even if you can’t pay in full.
You can settle IRS debt by negotiating payment terms, applying for an Offer in Compromise, requesting Currently Not Collectible status, or setting up a payment plan, each with specific requirements and pros/cons.
Owing the IRS is stressful, but you have more options than you might think. Whether you owe a few thousand dollars or six figures, the IRS offers programs to help taxpayers resolve their debt in ways that fit their financial situation.
