IRS Payment Plan? Here’s What Happens to Future Refunds
If you owe a large amount of back taxes to the IRS, but can’t pay right away, you might consider setting up an IRS payment plan. When you set up a plan with the IRS, you pay your taxes to the IRS in installments. The details of how to pay, when and what information you’ll need to supply to the IRS will be based on your personal situation.
Depending on the size of your tax bill, it may take years to pay off the balance on your IRS payment plan. In the meantime, you’ll need to pay your current and future year taxes through withholding or estimated taxes. When you file your annual return, the IRS will apply any refund that you should receive against the amount you owe.
IRS Refund Payment to Reduce Outstanding Tax Balance
Using your IRS refund payment toward your back taxes will help you pay off your balance and end your IRS payment plan sooner. Of course, if you determine that you owe taxes for a given year instead of receiving a refund, you’ll need to pay the current tax bill on time.
Once your outstanding tax balance has been repaid, you can once again receive future IRS refund payments directly.
Getting Expert Help
Need help understanding your options? The Tax Pros at H&R Block can help answer your IRS payment plan questions. Learn more about H&R Block Tax Audit & Notice Services.
What triggers the IRS to audit a tax return? Learn how common tax mistakes and errors can be a red flag and affect your chances of being audited by the IRS.
Find the current percentages for federal income tax rates, capital gains tax rates, Social Security tax rates and more from the tax experts at H&R Block.
The key to understanding your w-2 form is decoding the boxes and numbers. Learn how to read your w-2 form with this box-by-box infographic from H&R Block.
The tax experts at H&R Block outline how students and parents can file Form 8863 and document qualified expenses. Read about Form 8863 here.