If you are wondering what to do when you owe the IRS backtaxes,the most important thing to remember is that you will have to pay them back (although a good might - disagree). The IRS can garnish your wages,or take other action if you simply don’t pay them back. And you’ll need to file your taxes as normal,even if you know that you will be owing the IRS.
Fortunately,the IRS does make it fairly straightforward to pay back taxes. If you end up owing taxes for the previous tax year,they will mail you a detailed breakdown and a request for payment. You can than pay them the full amount,or you can call them to set up a payment plan to pay off the back taxes. The payment plan can also be set up online too at the IRS website,after first having created an account.
If you choose a payment plan to pay the back taxes you owe,the IRS will work with you to come up with a monthly amount you can afford,and you can also choose the due date each month. You will have to pay a small fee to set up the loan to begin with,and you will end up paying interest on the back taxes,and another fee to reestablish your loan if you default on it. The balance can be checked online,and the IRS will send a monthly summary.
When it’s time to file the following year’s taxes,just file them as you normally would. If you are due a refund,the IRS will apply that amount towards your back taxes debt; if you didn’t pay enough tax and owe money again,that amount can be rolled over into your existing loan. The important thing is to communicate with the IRS and make sure you keep up with your scheduled payments. Or simply have a- handle the process for you.