Money in the bank... It is tax season, and you're licking your lips at the prospect of what you're going to use your tax refund on. You filed your taxes as soon as you got your W-2, and now all you have to do is wait for your refund to come in... and wait, and wait, and... where's your refund?
Bad news... If you were expecting a refund from the IRS and haven't received one, you may owe the IRS money in back taxes. So how can you find out if you owe a tax debt to the IRS? And is there anyway that you can get your refund if you do owe an IRS debt?
Go to the source... You can contact the IRS and find out if you do owe them and how much you owe. If the debt is from prior tax years, then the IRS will tell you how far the debt goes back. At this point, they'll probably want to know how you intend to pay your debt and ask if you can pay the IRS right now.
Tell them nothing... If you do owe a debt, don't answer any questions to the IRS over the phone. The IRS is just like the police, "...Anything you say can be used against you."
Check and recheck... Get your tax records together and make sure the numbers come out correct. If you're certain the IRS made a mistake, you can appeal the debt and get back your refund. However, you have to prove to the IRS that they made the mistake, and not you. More importantly, you have to have every scrap of paper to show the IRS.
If you find you do owe the IRS, then you will not be getting your refund back. What's worse, until the debt is paid off, any future refunds will automatically be applied to your IRS tax debt.
Even worse... Is there anything worse than not getting a refund? You could get a tax refund, and then a few months later, you receive a letter from the IRS stating that you filed your taxes incorrectly and you need to pay the refund back!
It is all gone... What's worse, you've already spent the refund, and now you don't have any way to pay back the IRS the money you owe them.
... and recheck... Again, you want to get all of your paperwork together and make sure you filed your return correctly. Make sure you have all your evidence to back up any tax deductions or tax credits that you claimed. But it's rare for the IRS to reverse their decision once they've made it.
Up the creek... So you don't have a tax refund, but instead have a tax debt and the IRS wants their money right now! The worst thing you can do is panic. There are a number of solutions available to you for taking care of an IRS tax debt, or if possible, getting your refund into your pocket.
Now you have the smoking gun... Use it!
Labels: Tax Refunds