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.
The IRS audited your tax return and the changes resulted in additional taxes owed. Learn more about IRS letter 531 from the tax experts at H&R Block.
If you owe taxes and you can’t pay them all, you have options. Read H&R Block's guide to the types of IRS installment agreements - and how to figure out which one is right for you.
Learn about IRS return and account problems that you may encounter when filing taxes from the tax experts at H&R Block.
Do you want to appoint a third party designee on your tax return? Learn how to include an IRS third party designee with the tax experts at H&R Block.