Uprova Bar
May 13, 2021

Why you might owe money to the IRS this year.

Don’t get surprised by a tax bill. While most income is taxed, there may be reasons why you owe the Internal Revenue Service this year, even if money was withheld from your paychecks. Discover reasons why people owe money to the IRS, and how to avoid underpaying in the future. Also, learn what to do if you get a tax bill you can’t afford and what your payment options are.

1. You withheld too little from your paycheck.

How much you withhold from your paycheck throughout the year is an estimate of what you should owe the IRS. Those who overpay receive refunds, but if you don’t pay enough throughout the year, you can owe money to the IRS during tax season. A 2018 report by the Government Accountability Office (GAO) stated that a fifth of taxpayers might owe taxes in 2019 due to under-withholding. One reason under-withholding happens is due to changes in tax laws. In 2019, for example, the U.S. Treasury Department did not update the personal withholding amount to reflect changes in the tax law.

2. You failed to file on time.

The annual due date for federal taxes is April 15th (it has been pushed to May 17th in 2021). State tax due dates vary. If you file your taxes late and fail to apply for an extension on time, you could be charged late fees and interest in addition to any tax debt.

3. There were changes to tax code.

There have been many changes made to tax code in recent years. That can impact how much you owe in taxes. Even if you received refunds in previous years, you may owe money under new tax laws. The IRS has updated tax brackets, which may have put you into a new bracket.

4. You earned more income than usual.

Earning more income means that you owe more taxes. If you earned enough to put you into a higher tax bracket, you could owe a much higher tax bill this year. If you received benefits like unemployment and didn’t select to have taxes deducted from your payments, you may also receive a tax bill.

5. There were changes in deductions.

Changes in what you can deduct from your taxes can cost you. If you were able to deduct certain expenses in the past and are no longer able to, you could owe money. For example, if you are a parent who took advantage of the child tax credit in previous years, you could owe more this year if your child aged out of eligibility or you earned more than the income limit.

What to do if you owe money.

If you can’t pay your tax bill when it’s due, there are a number of things you can do, including:
  • Apply for a full-payment agreement to pay your taxes within 120 days.
  • Sign up for an installment plan through the IRS.
  • Make an offer to the IRS.
  • Take out a personal loan to cover the expense.

You will need to qualify for these options, especially if you are considering taking out a loan. Uprova provides personal loans to consumers with a wide range of credit backgrounds. You can request between $300 and $5,000 online at Uprova.com to help cover tax expenses and more. If you qualify, you can receive funds in your account in as soon as one business day. Cover your tax debt today with a personal loan from Uprova.

The content of this website is for informational purposes only. Nothing on this website constitutes financial or professional advice. Consult a professional for advice suitable to your personal circumstances.

Uprova is a Trusted and Preferred Online Lender

Bringing accountability and transparency to online lending.

 Get Started