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There are many reasons you may want to know how much tax you owe the Internal Revenue Service (IRS). Some of these reasons include:
- You received a disturbing and threatening phone call from a tax agency claiming that you owe them thousands of dollars. These calls are most likely a form of fraud.
- You received a notice in the mail from the IRS (or a state department of revenue) that claims you owe money.
- You’re currently paying off tax debts under an installment plan.
- You’re disputing a tax issue, penalty, or interest charge with the IRS and want to know what your tax balance is on their end.
- You may have multiple years of unfiled tax returns and want to see how much you owe for each year.
Whatever the reason you have for checking your tax balance, you’ll be happy to know that there are several options available to you.
In this guide:
- Check your tax balance online
- Check your tax balance by phone
- Check your tax balance by mail
- Get your state tax balance
- How to pay off a tax balance
Check your tax balance online
The newest and most efficient way to get your tax balance from the IRS is online through newly developed taxpayer accounts.
The taxpayer account system was introduced in 2021 and gives taxpayers (and their appointed representatives) access to all of the important information from their tax accounts for the last several years.
The three most important records to look out for are:
- The account transcript that tracks your balance
- The return transcript that shows each line of your annual tax return
- The wage and income transcript that includes all income sources reported under your Social Security number for that year
The online account balance is up-to-date information and includes all payments, refunds, penalties, and interest that show each year. Here, you can see exactly how the IRS came to the figures that show up on any mailed notices you may have received.
You can make payments, set up payment plans, and monitor your tax balance until it is paid off through your online account.
The main concern with creating an IRS online account is the potential for identity theft. The IRS has taken this risk seriously and in the past required taxpayers to answer many detailed questions about credit or filing history to verify their identity before accessing account information.
To reduce the frustration of that lengthy process, the IRS had been trying out a new identity verification system called ID.me that involves facial recognition technology, selfies, and the use of smartphones. While still being offered, the IRS is moving away from that system due to concerns over data privacy.
Currently, they’re trying out a Video Chat Agent—a human employee who will examine your documents and verify your identity during a brief online video call. While both options are currently available, both require advanced technology that may be out of reach for some people.
To create an online account with the IRS, follow these steps:
- Go to IRS.gov
- Click on the “Sign in to your account” prompt
- Click the “Sign in to your Online Account” button
- Click the “ID.me Create an account” button
- Enter an email and password and then click the “Create an ID.me account” button
- Follow the prompts to verify your email and choose either the selfie or video chat option to complete your verification
Check your tax balance over the phone
One of the most common ways to get tax account information has always been to call the IRS directly. The IRS has a toll-free hotline (800-829-1040) available Monday through Friday from 7 AM to 7 PM local time. Agents on staff can answer questions about individual account balances and tax returns as long as callers can verify their identity over the phone.
Unfortunately, according to the latest Taxpayer Advocate Report, only about 11% of 282 million callers reached an IRS employee in 2020 due to lower budgets and staffing shortages. Some callers have reported spending hours on hold waiting for a representative to speak with them. Some callers have had luck calling first thing in the morning or midweek, but this is an issue that’s been getting worse over time, and the pandemic hasn’t helped.
If you received a notice in the mail from the IRS, there is often a different phone number to call. While it’s worth trying before calling the number above, the same staffing shortages seem to be impacting wait times for this line as well.
The only other way to get an answer by phone is to hire a tax professional. Most of these professionals have access to a practitioner priority line that may be more likely to get answered than the general phone line. That being said, tax professionals charge a fee for their services but can be helpful if you need to dispute or attempt to lower your outstanding tax balance.
Check your tax balance by mail
If you’re not in a hurry, checking your tax balance by mail is an option. However, as noted above, IRS staffing issues and other factors have led replies to take several months in some cases.
Some computer-generated IRS notices that come in the mail provide up-to-date account balances but don’t always explain which numbers changed or why they changed. Most notices provide a mail address for responses, and it’s important to note which IRS division you are dealing with, as they have different offices all over the country.
If you want to see your current tax transcripts, you can mail in Form 4506-T to the IRS. If you want to see your account balance, you should request the account transcript, which details all the transactions for each year (payments, tax assessed, penalties, and amendments). Remember that each year has its own transcript, so if more than one year has a balance due, all those transcripts need to be requested.
Once form 4506-T is received and processed by the IRS, they will verify that the address on the form matches the one from the tax return. They’ll then mail out a paper copy of the account transcript. The entire process could take weeks or months, depending on the backlog of requests.
A better way to request an account transcript is to go on IRS.gov and request a transcript be mailed to you. This process does not require an online account or ID.me verification. Transcripts are mailed out to the address currently on file with the IRS. This method can result in transcripts arriving in a matter of days because they’re 100% computer-generated and preferred to Form 4506-T.
How to get your tax balance from the state
Like the IRS, most states offer the option to check your state tax balance online, over the phone, or by mail.
For a simple account balance inquiry, using the telephone may be the easiest. State tax hotlines are generally much easier to get through than the IRS. That being said, state governments are transitioning to online tax accounts, and most have been up and running longer than the IRS, so the verification process may be smoother.
The state online accounts offer many of the same services—tax balances, payment plans, online payments, and online filing of both business and personal taxes. To set up an online account with your state, you’ll need to verify your identity. This verification usually involves the state mailing out an identity PIN to the address on file and requiring filing information from previous years.
Contact your state’s department of revenue for more details.
What to do if you have a tax balance that needs to be paid off?
Knowing your tax balance is the first step in cleaning up your tax situation. Once you have that balance, you have to decide how to address that balance. Here are some options:
- Contest the amount by amending your tax return, appealing information that you disagree with, and asking for forgiveness of tax penalties.
- Pay the entire balance immediately
- Set up a payment plan and pay it off over time
- If you have a large tax balance, consider an Offer in Compromise, which allows the IRS to settle your balance for a lower amount if it’s deemed uncollectible.
- File bankruptcy to wipe the balance clean
Let’s look at each option
Before choosing one of the options listed above, you need to understand why you have an outstanding tax balance and whether any of it can be contested. There may be an overlooked tax credit, missing deduction, or mistake on your part that can be corrected.
If you have reasonable cause or a clean filing history before this missed payment, you may be able to reduce the penalty or have it forgiven entirely, so make sure to speak with the IRS before making any payments.
Once you’ve confirmed that the balance is accurate, you should think through your options for repayment. Immediately paying off the balance in full will relieve you of any further interest or penalties and gives you peace of mind that no more letters, notices, or liens can come from the IRS. However, make sure you can afford to make the full payment without creating financial hardship elsewhere.
If you can’t make a full payment, the IRS will work with you to set up an installment agreement. Agreeing to an installment agreement stops all notices and collection actions as long as you keep making on-time monthly payments. One downside of this option is a setup fee of $31 – $130 for long-term payment plans.
For larger balances, an Offer in Compromise may be an option. If there’s reason to believe that you’ll never be able to pay off your debt without severe hardship, you can make the IRS an offer to reduce your balance. The process is complicated and must be done in good faith, exposing all your assets and income sources. Those who might qualify should use the OIC prequalifying tool.
The last resort is filing for bankruptcy. However, this option can cause significant disruption to your life and doesn’t clear all forms of tax debt. Consult with a bankruptcy attorney if you are considering this option.
You have a right to know your tax balance, even if it can sometimes be challenging to locate. Staying on top of this number will keep you one step ahead of IRS and state notices so that you can plan your future without tax debt hanging over your head.
Author: Dan Connors