Recently, the U.S. Internal Revenue Service reported that Americans had accumulated over $120 billion in back taxes, penalties, and interest.

This staggering figure underscores a significant issue: despite severe consequences like hefty fines, asset seizures, and possible incarceration, millions of taxpayers still fall behind each year. Understanding exactly what you owe is crucial to avoiding becoming part of this troubling statistic. Knowing how to accurately determine your tax liability not only keeps you compliant with the IRS but also shields you from unnecessary financial strain.

This guide will provide you with the essential steps to find out exactly how much you owe, ensuring you can manage your taxes effectively and steer clear of penalties.

How to Determine If You Owe the IRS?

Figuring out if you owe back taxes to the IRS can be important first. Knowing this, you can only decide how to find out how much you own.

Here are reliable methods to check if you have outstanding tax debts:

1. Review IRS Notices

The most direct way to learn about any tax liabilities is through notices sent by the IRS. These notices typically arrive by mail and will detail any unpaid taxes. It’s important to recognize that the IRS does not use email, text messages, social media, or phone calls for initial contact, so beware of potential scams posing as such communications.

2. Use Your IRS Online Account

For a detailed view of your tax records, you can log into your account on the official IRS website (IRS.gov). This account provides access to your current tax balance, including a breakdown by tax year, which can help you understand exactly what you owe and check the IRS balance.

3. Examine Your Tax Returns

Another method is to file or review your tax returns for the specific years you’re unsure about. If you haven’t yet filed a return for a particular year, doing so will clarify whether you owe taxes once the IRS processes your submission.

4. Contact the IRS Directly

If you need personalized assistance, you can call IRS customer service at 800-829-1040. Be prepared for potential wait times, especially during busy periods like tax season. Speaking directly with an IRS representative can provide clarity on your tax situation and any next steps you may need to take.

Ways You can Find out How Much You Owe the IRS

If you think you might owe taxes or need to estimate your potential tax liability for previously filed or unfiled returns, this guide will help you accurately determine your tax liability on your own without initially contacting the IRS.

Gather Your Income Information

The first step is gathering documentation on all your income sources for the tax year, including:

  • W-2 forms from employers
  • 1099 forms for freelance/contractor work
  • Investment income statements
  • Rental property income records
  • Records of any other income

Having this information compiled makes calculating your total income easier.

Know Your Filing Status

Your filing status determines your standard deduction amount, eligibility for certain credits/deductions, and which tax brackets apply. The five filing statuses are:

  • Single
  • Married Filing Jointly
  • Married Filing Separately
  • Head of Household
  • Qualifying Widow(er)

Be sure to choose the right status based on your situation on December 31st.

Claim All Deductions & Credits

Deductions reduce your taxable income, while credits reduce your actual tax bill. Be sure to claim any you qualify for, such as:

Deductions:

  • Standard or itemized
  • Charitable donations
  • Mortgage interest
  • Student loan interest

Credits:

  • Earned Income Tax Credit
  • Child Tax Credit
  • Education credits

These can make a big difference in your tax liability.

Calculate Your Taxable Income

Your taxable income is your total income minus any deductions you qualify for. The higher your taxable income, the higher your tax bracket and tax rate.

Determine Your Tax Bracket

Using your taxable income and filing status, you can find your tax bracket percentage based on the IRS federal income tax brackets. This percentage applies to income within that bracket range.

Check for Any Additional Taxes or IRS owed amount

Certain situations, like having self-employment income or owing the alternative minimum tax, can increase your overall tax liability.

By following these basic steps and taking advantage of all deductions and credits you qualify for, you can feel confident that you’ve properly determined to answer Do I owe the IRS? Don’t hesitate to use the wealth of free resources the IRS provides, including assistance for taxpayers with the IRS amount owed.

End Note!

If you’re uncertain about how much you owe in taxes, it’s crucial to take action immediately. Following IRS guidelines and responding promptly to any notices, like the IRS Notice CP 504, can help clarify your tax obligations. Mr. Michael Sullivan and his team at Sullivan Tax Consulting specialize in IRS debt settlement, providing unfiled tax help, and offering expert IRS tax consultation. They are equipped to guide you through the process, ensuring you can resolve any tax issues efficiently and regain financial stability.

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Author

Mr. Michael D. Sullivan

Michael D. Sullivan is the founder of MD Sullivan Tax Group. He had a distinguished career with the Internal Revenue Service for 10 years. As a veteran IRS Revenue Officer / Agent, he served as an Offer in Compromise Tax Specialist and Large Dollar Case Specialist.

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