I haven’t filed my taxes since 2020 but fixed that recently. Some years I owe money, and for others, I’m owed a refund. After adding everything up, I owe about $800. I’m confused about whether I should just pay the total amount or send payments for the specific years I owe and wait for the refunds to cover the rest.
You need to make separate payments for each year you owe. Don’t combine the payments for different years, and make sure to keep federal and state taxes separate if your state has an income tax.
Kirby said:
You need to make separate payments for each year you owe. Don’t combine the payments for different years, and make sure to keep federal and state taxes separate if your state has an income tax.
What if I don’t have the money to pay one year but the refund from another year is almost the same? For example, I owe about $4K for 2020, but for 2021, they owe me $3,900.
@Luca
You could wait for the refund to come through and use it to pay what you owe, but that’s risky because interest will keep adding up on the unpaid balance. Late penalties have probably already maxed out, but the interest keeps going until the balance is paid.
@Luca
If you wait for the refund, the balance for the year you owe will keep growing with interest. It’s best to pay as soon as you can, even if you’re waiting for the refund. That way, you minimize the extra costs.
@Kirby
The penalties max out after a while, but the interest keeps going. You’re right about that. Paying off the balance as soon as you can is the best way to avoid more interest piling up.
Pay for each year separately, whether it’s online or by check. Don’t combine them.
You shouldn’t rely on refunds being processed quickly. Pay each year separately to stop penalties and interest from adding up.
Kingsley said:
You shouldn’t rely on refunds being processed quickly. Pay each year separately to stop penalties and interest from adding up.
My problem is I don’t have enough to cover all the years I owe, only enough to balance things out once refunds are applied.
@Luca
If you owe money, they’ll use your refunds to cover it. Pay down the balances starting with the most recent year. Make payments online instead of mailing checks. You can also check your account status online at irs.gov. That way, you’ll see how your payments and refunds are being applied.
Refunds will go towards your owed balance. If you have a rough idea of what you owe, make a payment online. Old returns take time to process, so setting up a payment plan might help while waiting for refunds. Keep track of everything on the IRS website.
If you need time, you can request an extension or set up a payment plan to avoid bigger problems like liens. Once everything is sorted, you can ask for penalty reductions if you qualify.
Asher said:
If you need time, you can request an extension or set up a payment plan to avoid bigger problems like liens. Once everything is sorted, you can ask for penalty reductions if you qualify.
Thanks. Most of my returns are processed except for 2020 since I had to mail that one in. Can’t wait to be done with all this.
Always write separate checks for each year. Early in my career, I tried combining amounts for multiple years, and it caused a nightmare with the IRS. Stick to one payment per year to avoid any confusion.
Can you break down how much you owe or expect to get refunded for each year? Also, did you e-file or mail them in? E-filed returns are processed faster, but paper returns can take a while. Start paying down what you can for each year online—it reduces interest even before they fully process everything. Focus on older balances first unless newer years have higher interest.
@Teo
The big years are 2020 and 2021. I owe $4,500 for 2020 and they owe me $3,700 for 2021. For 2022, I owe $200, and for 2023, I’m owed $150.