You may know that you owe the IRS money, but do you know exactly how much you owe?
Maybe you’ve received correspondence from the IRS in the mail stating that you owe a debt, but it’s not clear how much it is. The trouble with the paperwork that the IRS sends out is that it can be confusing, often referencing prior tax years which have faded from your memory, requesting forms you have never heard of, and threatening a hefty penalty if you don’t get everything to them by a certain date.
This is where a tax professional is helpful; you can forward them the intimidating IRS letter, and they will act on your behalf to resolve any disputes. But not everyone uses a certified professional accountant, which is why it’s always helpful to know about tax procedures.
IRS correspondence is complicated, and sometimes in between all the tax jargon you don’t fully understand, you aren’t even told exactly how much you owe, or why. To find out the best and most reliable ways would be to call the IRS directly or to check online using a specific tool they have provided for taxpayers. Mail is often lost in transit, and usually, the correspondence does not contain your total balance for all years owed anyhow.
Here’s a guide to finding out exactly how much you owe the IRS.
As mentioned, sending a balance request to the IRS by mail is not ideal. Mail can get lost, and often you do not get all the information you want. If the IRS has sent you a notice by mail, you can check to see if the balance is posted there. If there is an amount listed, this most likely does not include any penalties, late fees, or interest assessed since the notice was sent to you. It is also common for the IRS to send notices that only include one year of taxes owed. If you know you owe taxes for multiple years, you will need to add the balances from each notice from each year or use the online tool the IRS has provided to get the most up to date and accurate information.
If there is a balance posted on the notice from a non-IRS agency, it is likely that this relates to a non-IRS debt. If you received a notice from the state department, this would not include any information about your tax debt. It is best to call in or use the online tool for further information.
Using the IRS Online Tool
The IRS has an online tool that can help you figure out how much you owe in taxes. The tool shows a balance for each year, making it easy to see the total amount you owe. It also shows the principal amount and any penalties or interest you may have accrued. Another great feature is that it keeps track of any payments you have made in the last 18 months.
After you have made a payment, it usually takes the system one to three weeks to post your payment. Do not be alarmed if you make a payment and it does not post immediately. Interest and penalties are updated every 24 hours. After viewing the amount you owe, this online tool also provides you with direct links to set up an electronic payment or get your tax transcripts.
If you need an official hard copy of your tax transcripts, you can also use this tool to request that the IRS mail your transcript to you. This will usually take five to ten business days. If you filed a tax return for both yourself and your business, make sure you are using the tax ID number for the correct return. Another nice feature is that these transcripts are free of cost.
The information tool does require a two-factor authentication process. This system diligently protects sensitive information. To access this tool, you will need your date of birth, social security number, filing status, and the mailing address from your last tax return. You will also need to provide a phone number and email address with your name on the account. The final piece of information you need is an account number in your name from a mortgage, equity loan, car loan, or credit card.
You will only need all this information when you initially register to use the tool. If you are already registered, you will need your username and password. Due to the need for optimum security of confidential information, the IRS will never reach out to you via email, text message, or social media to request any financial or personal information.
Although this seems like a lot of information to input, it’s necessary to verify your identity. It is likely that the IRS will also pull your credit score as an additional security measure to ensure your identity. However, this will be a ‘soft pull’ and will not affect your credit rating. It may be helpful to gather all the information you will need before registration to ensure a quick and successful registration.
Though this online tool is very convenient, it is not operable during the middle of the night and is limited on Sundays.
Its hours of operation are:
Monday to Friday 6 a.m. to 12:30 a.m ET
Saturday 6 a.m to 10 p.m ET
Sunday 6 p.m. to 12:00 a.m ET
Calling the IRS
The online tool does require a lot of information that you may not be able to access. If you do not have all the information that is required for the use of the online tool, you may also find out your balance by calling the IRS. To inquire about your account balance individual taxpayers can call the IRS directly at 1-800-829-1040. Representatives are available Monday through Friday from 7 a.m. to 7 p.m. local time. The IRS provides their phone number on every notice they send out. If you have questions about your balance or need more information, that number is always readily available to you.
It may also be helpful to take down a few notes so that you have documented who you spoke to, when you spoke, and what you spoke about, should you ever need it in the future.
If you would like to request a copy of your tax transcript by phone, you can call the IRS number 1-800-908-9946. This number is dedicated to transcript requests and used an automated system that will provide you will all the information required to file your transcript request. Unlike a live representative line, you can call this number 24 hours a day, 7 days a week.
Most matters involving the IRS can be overwhelming, especially when it comes to debt. Even worse than owing debt is knowing that you owe something but having no idea what the actual amount is! It is key to be proactive so that you do not get penalized for late or non-payments. However, to come up with a plan, you first need to know how much it is you owe. If you have received notices from the IRS in the mail, you can check for a balance there. If you do not see a dollar amount, you can also use the online tool found at IRS.gov/account. Accessing the online tool does require a two-step authentication, so if you do not have all the required information, you can also call the IRS directly. Preventative action is best but getting your account balance ASAP is an excellent place to start and a great way to be proactive about your financial future.