Bank Returned My IRS Payment - What Happens Now?
Title: Bank Returned My IRS Payment - What Happens Now? 1 I'm panicking a bit and need some advice. I filed my 2023 taxes and owed money to the IRS. I set up automatic payment when I filed, but I messed up my accounts and didn't have enough in my checking to cover the full IRS withdrawal (I was literally short like $12, and of course I have plenty in my savings account). My bank just notified me that they returned the payment to the IRS due to insufficient funds. Now I'm completely lost on what happens next. Will the IRS automatically try to withdraw again? Will they send me a bill or notice in the mail? Is there a way to just pay it online now before they hit me with a bunch of penalties? I've never had this happen before and I'm worried about getting into trouble with the IRS over what was honestly just a stupid mistake with my accounts.
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Honorah King
8 This happens more often than you'd think! Don't panic. When a payment is returned due to insufficient funds, the IRS won't automatically try to withdraw again. They'll send you a notice (usually a CP14 or similar) showing the amount due plus any additional penalties and interest. You don't need to wait for the notice though - you can pay right away! Go to IRS.gov/payments where you have several options: IRS Direct Pay (pulls directly from your bank account), credit/debit card payment (though this has a processing fee), or you can set up an electronic funds withdrawal. Just make sure you have the proper tax year (2023) and form selected. They'll likely assess a small penalty for the returned payment (sometimes called a "dishonored payment penalty") of about 2% of the payment amount, plus interest on the unpaid balance, but paying quickly will minimize these extra costs.
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Honorah King
•15 Will they report this to credit bureaus? My payment was just returned last week and I'm worried about my credit score taking a hit.
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Honorah King
•8 No, the IRS doesn't report these kinds of payment issues to credit bureaus. They handle collections internally rather than reporting to third-party credit agencies. If you pay promptly after the payment was returned, you'll just face the small dishonored payment penalty and some interest - there's no credit impact. The key is not to ignore it for months, as that's when more serious collection activities could eventually begin.
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Honorah King
12 I went through something similar last year and found taxr.ai super helpful for figuring out my options. I was confused about penalties and whether I'd get hit with a failure-to-pay charge on top of the returned payment fee. I uploaded my notice to https://taxr.ai and it gave me a clear breakdown of my payment options and estimated penalties specific to my situation. Saved me hours of stressing and googling.
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Honorah King
•6 Does this actually work with returned payment situations? I thought it was just for understanding tax forms and stuff.
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Honorah King
•17 I'm skeptical about these services. How is this different from just calling the IRS directly? Do they actually have access to your IRS account?
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Honorah King
•12 It absolutely works for returned payment situations. The tool analyzes the specific notice or letter you receive and can tell you exactly what the penalties mean, payment deadlines, and your options. It's not just for basic forms. They don't have access to your IRS account - you upload your notice and their AI analyzes the document and compares it against their database of IRS regulations and procedures. It's much faster than trying to interpret everything yourself, especially when you're worried about penalties adding up.
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Honorah King
6 I wanted to follow up after trying taxr.ai for my own returned payment situation. I uploaded the CP14 notice I got from the IRS and got detailed explanations for all the penalty calculations and deadlines that were honestly confusing me. It even explained that I could request a first-time penalty abatement since I had a clean payment history before this mistake. Just submitted my payment plus the small returned check fee (saved me nearly $80 in other penalties they were going to charge). Definitely worth checking out if you get one of those scary IRS notices!
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Honorah King
3 If you need to call the IRS to ask about your specific situation (like requesting penalty abatement), good luck getting through. I spent THREE DAYS trying to reach someone about my returned payment. Finally used https://claimyr.com and had an IRS agent on the phone in under 20 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c - they basically wait on hold for you and call when an agent picks up. Saved me so much frustration.
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Honorah King
•9 Wait, how does this actually work? Do they somehow have a special line to the IRS or something? Seems fishy.
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Honorah King
•23 This sounds like a scam. Why would I pay someone else to call the IRS when I can just keep calling myself? The IRS eventually answers if you keep trying.
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Honorah King
•3 No special line - they use automated technology to wait on hold so you don't have to. You get a call back only when a real IRS agent is on the line. I was skeptical too, but it's just a time-saving service. I totally get the hesitation. I initially thought the same thing and spent days trying to get through myself. But after the third day of being disconnected or on hold for hours, I decided my time was worth more. The IRS does eventually answer, but often after multiple attempts and hours of hold music - fine if you have unlimited time, but most of us don't.
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Honorah King
23 I need to eat my words about Claimyr. After another week of failing to reach anyone at the IRS about my returned payment issue, I tried the service yesterday. They called me back in 35 minutes with an actual IRS agent on the line. Got my payment situation sorted out in 10 minutes instead of wasting another week trying to get through. If you're in a time crunch to fix a returned payment before more penalties kick in, it's absolutely worth it.
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Honorah King
19 Quick tip: Make sure you pay the penalty too! When my payment bounced, I immediately paid the original amount but forgot about the returned payment penalty. Ended up getting another notice a month later for just the penalty amount plus interest. Such a headache for a small amount.
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Honorah King
•7 How did you know how much the penalty was? Did you have to wait for them to send you something in the mail?
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Honorah King
•19 I waited for the notice which came about 3 weeks after the payment was returned. The penalty was calculated as 2% of my original payment amount. If you want to estimate it yourself before getting the notice, just take your original payment amount and multiply by 0.02. That should be pretty close to what they'll charge you for the returned payment penalty.
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Honorah King
5 Is the IRS Direct Pay website easy to use? My payment got returned last month and I still haven't gotten a notice, but I want to fix this ASAP.
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Honorah King
•10 It's actually really straightforward. Just go to IRS.gov, search for "Direct Pay" and follow the prompts. Make sure you select "payment type" as "tax return or notice" and choose the correct tax year (2023). You'll need your SSN, filing status, and date of birth to verify your identity. Takes about 5 minutes total.
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StarStrider
Don't stress too much about this! I had the exact same thing happen to me last year - bank returned my payment because I forgot about an automatic bill that cleared the same day. The IRS will send you a notice in the mail (took about 2-3 weeks for mine to arrive), but you don't have to wait for it. You can go ahead and pay online right now through IRS Direct Pay. Just make sure to include a little extra for the returned payment penalty - it's usually around 2% of your original payment amount. The good news is this won't hurt your credit score or anything like that. It's really just a minor administrative issue that gets resolved once you pay. I paid mine the day after I got the notice and never heard anything else about it. One thing I learned: if this is your first time having payment issues with the IRS and you have a good payment history otherwise, you might be able to request "first-time penalty abatement" to get the penalty waived. Worth looking into!
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Laura Lopez
•Thanks for the reassurance! I'm definitely going to look into that first-time penalty abatement option you mentioned. Do you know if there's a specific form I need to fill out for that, or can I just call them and request it? I've never had any issues with the IRS before, so hopefully they'll be understanding about this honest mistake.
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