When referring to an income tax return, the amount due refers to the total money a taxpayer must pay to the government. This only occurs when the total taxes are greater than the total tax payments for that year. For example, if you claimed too many allowances on your W-4 when you began a job, this can lead to under-withholding taxes, which can result in having to pay more on tax day.
If you have found a balance due on your return, not only is it vital that you understand the IRS amount due meaning but also that you take care of the amount as soon as possible. If you don’t, the IRS could place a failure to pay penalty, a percentage rate increase on your amount due that grows the longer you don’t pay. While this rate maxes at 25%, there is no reason to hold off paying your amount due.
What Does Proposed Amount Mean from the IRS?
The proposed amount due is very similar to the amount due on an income tax return, as it refers to an amount of money that is due to the IRS. However, a proposed amount due doesn’t have to be related to over or under-withholding.
For instance, you could receive a CP2000, sometimes called an underreporter inquiry. You can receive this notice when information on your taxes doesn’t match what is on the IRS’s records, such as if you took deductions and credits that your records say you shouldn’t have. The notice proposes taxes and possible penalties.
However, the CP2000 is generated by a computer, so it may not always be accurate. It is not uncommon for a taxpayer not to owe anything after a CP2000.
How to Pay Your Income Tax Return
If you are still wondering about the proposed amount and amount due, or are simply wondering how to pay your income tax return, know that your best option is to work with someone who intimately knows tax law, like a professional at ATM Tax Pro.