I have not filed tax returns for several years. What should I do?

Call (800) 829-1040. The assistor will answer your tax questions and help you obtain blank prior year forms and financial information. Some prior year tax forms are available on this site. For additional information, refer to Tax Topic 153, What to do if You Haven't Filed Your Tax Return.

References:

• Tax Topic 153, What to do if You Haven't Filed Your Tax Return
• Prior Year Tax Forms

I'm concerned about the public debt. Can I make a payment to reduce it?

Yes. You can make a contribution (gift) to reduce the public debt. Make a separate check payable to the "Bureau of the Public Debt." You can also enclose the check with your tax return. Please do not add this gift to any income tax you owe. You can send the check to the

You can deduct this gift as a charitable contribution on your next tax return if you itemize your deductions on Form 1040, Schedule A. If you owe tax, make a separate check for that amount payable to "United States Treasury."

References:

• Publication 17, Your Federal Income Tax

I'm concerned because my check payment to the IRS has not been cashed yet. What should I do?

You can call (800) 829-1040 and ask an IRS representative if the payment has been credited to your account. If it has not and the check has not cleared your financial institution, you may choose to place a stop-payment on the original check and send another payment.

I am unable to pay my delinquent taxes. Will the IRS accept an Offer in Compromise?

You may qualify for an Offer in Compromise if you are unable to pay your taxes in full or if you are facing severe or unusual economic hardship. Refer to Tax Topic 204, Offers in Compromise, for additional information.

References:

• Tax Topic 204, Offers in Compromise
• Form 656 (PDF) , Offers in Compromise
• Additional topics Offer in Compromise

Is there any special assistance available on unresolved tax matters which are creating a hardship?

If you are suffering, or about to suffer a significant hardship because of the way Internal Revenue laws are being carried out, you may ask for special help from the IRS' Taxpayer Advocate Program. The Taxpayer Advocate represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. You can reach that office by dialing (877) 777-4778.

References:

• Tax Topic 104, Taxpayer Advocate Service - help for problem situations

I owe money this year. Who do I make the check out to?

When you pay by check or money order, make it out to the "United States Treasury." Please show your correct name, address, social security number, daytime telephone number, and the tax year and form number on the front of your check or money order. Double check to make sure that you have printed your social security number correctly and that it matches the one used on your income tax return.

Enclose your payment with your return, but do not attach it to the form. If you received Form 1040-V, Payment Voucher, use it to send your payment to the IRS. This will help us process your payment more accurately and efficiently. Follow the instructions that come with the form.

You can also pay part or all of your tax by using a credit card (American Express Card®, Discover Card®, Master Card®, or Visa® card). Payments can be made by phone or Internet. There are two credit card processors (also referred to as service providers), which offer this service. Service providers charge you a convenience fee for the service.

References:

• Credit Card Benefits and Features

Can I ask to make installment payments on the amount I owe?

Yes. If you cannot pay the full amount due as shown on your return, you can ask to make monthly installment payments. However, you will be charged a one time user fee of $43.00, and you can be charged a late payment penalty unless you can show reasonable cause for not paying the tax by April 15, even if your request to pay in installments is granted. Before requesting an installment agreement, you should consider less costly alternatives such as a bank loan.

To request an installment agreement, send Form 9465 (PDF), Installment Agreement Request with your return or call (800) 829-1040. You should receive a response within 30 days. For more details on installment payments, refer to Tax Topic 202, What to do if You Can't Pay Your Tax, or Publication 594 (PDF), Understanding the Collection Process.

References:

• Publication 594 (PDF), Understanding the Collection Process
• Form 9465 (PDF), Installment Agreement Request
• Tax Topic 202, What to do if You Can't Pay Your Tax

I just completed my return and find that I owe the IRS money. What should I do?

You should file your return even if you can't pay the entire amount you owe. File by the due date of the tax return and pay as much as possible. By filing on time, you avoid the late filing penalty. By paying as much of the amount you owe, you reduce the amount of interest and late payment penalty that you will owe. If you are unable to pay the full amount of your balance, you can request an installment agreement to pay the amount due with Form 9465 (PDF) or calling (800) 829-1040. For more details on interest and penalties, refer to Tax Topic 201, The Collection Process, or Publication 594 (PDF), Understanding the Collection Process.

References:

• Publication 594 (PDF), Understanding the Collection Process
• Tax Topic 201, The Collection Process

What kind of penalties and interest will I be charged for paying and filing my taxes late?

Interest, compounded daily, is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is the federal short-term rate plus 3 percent. That rate is determined every three months.

For current interest rates, go to News Releases and Fact Sheets and find the most recent Internal Revenue release entitled Quarterly Interest Rates.

In addition, if you filed on time but didn't pay on time, you'll generally have to pay a late payment penalty of one-half of one percent of the tax owed for each month, or part of a month, that the tax remains unpaid after the due date, not exceeding 25 percent. However, you will not have to pay the penalty if you can show reasonable cause for the failure. The one-half of one percent rate increases to one percent if the tax remains unpaid after several bills have been sent to you and the IRS issues a notice of intent to levy.

Beginning January 1, 2000, if you filed a timely return and are paying your tax pursuant to an installment agreement, the penalty is one-quarter of one percent for each month, or part of a month, that the installment agreement is in effect.

If you did not file on time and owe tax, you may owe an additional penalty for failure to file unless you can show reasonable cause. The combined penalty is 5 percent (4.5% late filing, 0.5% late payment) for each month, or part of a month, that your return was late, up to 25%. The late filing penalty applies to the net amount due, which is the tax shown on your return and any additional tax found to be due, as reduced by any credits for withholding and estimated tax and any timely payments made with the return. After five months, if you still have not paid, the 0.5% failure-to-pay penalty continues to run, up to 25%, until the tax is paid. Thus, the total penalty for failure to file and pay can be 47.5% (22.5% late filing, 25% late payment) of the tax owed. Also, if your return was over 60 days late, the minimum failure-to-file penalty is the smaller of $100 or 100% of the tax required to be shown on the return.

Also, refer to Tax Topic 653, IRS Notices and Bills and Penalty and Interest Charges.

References:

• Tax Topic 653, IRS notices and bills and penalty and interest charges
• News Releases and Fact Sheets

I received an IRS bill for an amended return I filed. I am not able to pay the whole amount at this time. Will the IRS allow me to make monthly payments?

If you cannot pay the full amount due, you can ask to make monthly installment payments. You can be charged a fee for this arrangement. Penalties and interest will continue to accrue on the unpaid amount until the account balance is paid in full. Refer to Tax Topic 202, What to Do if You Can't Pay Your Tax, for more information.

References:

• Tax Topic 202, What to do if you can't pay your tax
• Form 9465 (PDF), Installment Agreement Request

I've been told that payment of taxes can be deferred until August. I've also been told that payment is due April 15th and the extension is just for follow-up paperwork. Which is correct? Is it possible to file an extension for payment of taxes due?

If you are unable to file your individual tax return by the due date, you can get an automatic 4-month extension of time by filing Form 4868 (PDF), Application for Automatic Extension of Time to File for U.S. Individual Income Tax Returns, before the due date, usually April 15. By filing this form, you can avoid a late filing penalty. However, this extension does not give you more time to pay the tax you owe. It is only an extension of time to file your return. If you need an extension of time to file, you need to estimate how much tax, if any, you'll owe, and include that payment with your Form 4868. If you cannot pay the entire amount or a part of that amount, please see the information above.

If you are a U.S. citizen, resident or a member of the armed forces, whose home and main place of business or post of duty are outside the U.S. and Puerto Rico on the return due date, you are allowed a two-month extension until June 15, to file your return and pay any tax due. If you use this automatic extension, you must attach a statement to your return saying that your home and your main place of business or post of duty are outside the U.S. and Puerto Rico on the due date of your return. If you have a balance due on your return, it will be subject to interest from the due date (usually April 15) until you pay the tax.

References:

• Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
• Publication 17, Your Federal Income Tax

If I file for an extension, do I still have to send in any money I think I might owe by the April 15th date, or can I wait until I know exactly what I owe or don't owe and send it in by the extension due date?

If you need an extension of time to file, you need to estimate how much tax, if any, you'll owe on Form 4868 (PDF), Application for Automatic Extension of Time to File for U.S. Individual Income Tax Returns. You do not have to pay the amount of the estimate in order to obtain the extension. However, the extension does not give you more time to pay the tax you owe; it is only an extension of time to file your return. If you owe any amount of tax when you file your return, you will be charged interest on that unpaid balance from the original due date (usually April 15) of the return. You will also be charged a late payment penalty if the unpaid balance is more than 10 percent of your actual tax liability unless you have reasonable cause for the failure to pay.

References:

• Publication 17, Your Federal Income Tax

I filed an extension in April and still owe the IRS. I want to pay the money before the August deadline to file. Do I need to fill out a form to send in with my check? Where do I send the check? What are the penalties, interest due for not paying by April 15th?

Interest will be assessed from the due date of the return. When you file your return, simply pay the amount due. The IRS will send a notice of the interest due. You will also be charged a late payment penalty if the unpaid balance is more than 10 percent of your actual tax liability unless you have reasonable cause for the failure to pay.

References:

• Publication 17, Your Federal Income Tax

Is there an Offer and Compromise form available? How can I get one?

The Offer and Compromise form you must complete is Form 656 (PDF), Offer in Compromise.

You can get this form by calling (800) 829-3676 or you can download it at Forms & Pubs through our internet site.

References:

• Publication 594 (PDF), The IRS Collection Process
• Publication 594SP (PDF), Comprendiendo el Proceso del Cobro
• Form 656 (PDF), Offer in Compromise
• Tax Topic 204, Offers in compromise

I still owe taxes from a previous year and am getting a refund this year. I would like to apply this refund to the taxes I owe. How do I go about doing this?

You may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. Your refund will automatically be applied to any outstanding balances.

Can my refund be used to pay other debts?

Under the law, state and Federal agencies refer to the IRS the names of taxpayers who are behind in their support payments, taxes, and loans. Your tax refund may not be refunded to you if you are delinquent in child or child and spousal support payments, have a past due Federal debt (such as a student loan), or owe state income taxes. Therefore, your refund will be used to pay other debts you owe. For additional information, refer to Tax Topic 203, Failure to Pay Child Support and Other Federal Obligations.

References:

• Tax Topic 203, Failure to Pay Child Support and Other Federal Obligations

Can a person receive a tax refund if they are currently in a payment plan for prior year's federal taxes?

As a condition of your agreement, any refund due you in a future year will be applied against the amount you owe. Therefore, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. The IRS will automatically apply the refund to the taxes owed. If the refund does not take care of the tax debt; you must continue the installment agreement.

If you are under a Chapter 13 bankruptcy plan and due a refund, do you still get it?

Whether a refund will be sent to you, the trustee, or offset against outstanding liabilities will depend on local bankruptcy rules, the terms of your Chapter 13 plan, as well as the individual facts and circumstances of your case.

I'm concerned because my check payment to the IRS has not been cashed yet. What should I do?

You may call 1-800-829-1040 and ask an IRS representative if the payment has been credited to your account. If it has not, you may choose to place a stop-payment on the original check and reissue the payment.

I gave my friend a loan to do business, but the business went bankrupt and she did not pay me back. Can I deduct this bad loan?

If someone owes you money that you cannot collect, you have a bad debt. Bad debts are deductible only if the amount owed has been previously included in your income. For a discussion of what constitutes a valid debt, see Publication 535, Business Expenses and Publication 550, Investment Income and Expenses . If you are a cash basis taxpayer, as most individuals are, you may not take a bad debt deduction for expected income you have not received, since it was never included in your income. There are two kinds of bad debts - business and nonbusiness.

A business bad debt, generally, is one that comes from operating your trade or business. A business deducts its bad debts from gross income when figuring its taxable income. Business bad debts may be deducted in part or in full.

All other bad debts are nonbusiness. Nonbusiness bad debts must be totally worthless to be deductible. You cannot deduct a partially worthless nonbusiness bad debt. You must establish that you have taken reasonable steps to collect the debt and that the debt is worthless. It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. You may take the deduction only in the year the debt becomes worthless. A debt becomes worthless when the surrounding facts and circumstances indicate there is no longer any chance the amount owed will be paid. You do not have to wait until the debt comes due.

A nonbusiness bad debt is reported on Form 1040, Schedule D (PDF) , Capital Gains and Losses, as a short-term capital loss. It is subject to the capital loss limit of $3,000 per year. This limit is $1,500 if you are married filing a separate return. A nonbusiness bad debt requires a separate detailed statement attached to the schedule D. For more information on nonbusiness bad debts, refer to Publication 550, Investment Income and Expenses . For more information on business bad debts, refer to Publication 535, Business Expenses .

References:

• Publication 535, Business Expenses
• Publication 550, Investment Income and Expenses
• Form 1040, Schedule D (PDF), Capital Gains and Losses