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.

Related Topics

Related Resources

Third-Party Designee

If you check the box in the third-party designee section of your return, the person you name will be able to discuss your return and refund with the IRS.

Filing A Schedule C For An LLC

Do you need to file a Schedule C for an LLC if you didn't do business this year? Learn more from the tax experts at H&R Block.

IRS Letter 4314C – Interim Letter

Learn more about letter 4314C, why you received it, and how to handle an IRS 4314C letter with help from the tax experts at H&R Block.

IRS Letter 3338C – Audit Reconsideration Acknowledgment

Did you receive IRS Letter 3338C? Learn more about letter 3338C and how to handle it with help from the tax experts at H&R Block.