You have worked and sweated over your tax return. Maybe you even swore a time or two as you prepared this all-important document. You have crunched the numbers, and now you get a first look at the results of all your hard work.
To your horror, the refund you had anticipated has failed to materialize. In fact, the bottom-line number shows that you owe additional money to the IRS. Now, what do you do? Do you panic and hide out until the tax filing deadline has come and gone? Do you simply not file, hoping your return will slip under the radar and somehow escape the wrath of the IRS?
Neither of those is a good solution, and either is likely to get you into even hotter water. So before you panic, put down your receipts, put your documents away, and take these critical steps instead.
Double-check the numbers to make sure you really owe taxes
The first thing you should do is double-check the numbers. The bad news you are seeing on the screen could simply result from bad math or, more likely, erroneous data entry.
Before you do anything else, take a minute to review all of the numbers you entered. Did you put a single amount in twice or type the wrong digit into the program? If so, your tax dilemma could be solved, and you can simply sit back, relax, and wait for the anticipated refund to roll into your bank account.
Seek out last-minute tax deductions
Even if you still owe taxes to the IRS, all might not be lost. As long as the tax filing deadline has not yet passed, you may still have access to some hefty tax savings, including contributions to an IRA or health savings account.
It might be tough to scare up the money for that last-minute IRA deduction or contribution to a health savings account, but when you consider the alternative, you might see things from a new perspective. If you fail to act, you will have to pay the money to the IRS. But if you take advantage of these last-minute tax deductions, you will essentially be paying the money to yourself instead.
Make a plan to pay the taxes owed to the IRS
As you can see, there are several steps to take when you think you owe taxes to the IRS. From making a last-minute contribution to your IRA or opening a new health savings account to double-checking your math and having an expert review your return, each of these steps could end up wiping away the apparent debt.
Even so, there are times when the numbers will be correct, and when no amount of last-minute tax deductions will eliminate the amount you owe the IRS. If that happens, it’s time to make plans to pay, and the sooner you act, the better.
If you have the resources to pay what you owe, writing a check to the IRS is the path of least resistance. No matter how painful the experience is, once that check is in the mail, you can stop worrying about taxes for another year.
If you do not have the funds to pay, the IRS will work with you. Consider getting on an IRS payment plan or apply for an offer in compromise if you qualify.
