How to Handle an

If you're like most Americans, the process of filing taxes - while painful - typically results in a refund from the IRS.

 So far this year, 84 percent of filers have received a refund. The average refund amount this year is just over $3,000.

The percentage of filers receiving refunds from the IRS typically declines as April 15 approaches, since people who owe taxes tend to file returns later.  The majority of those who owe money expect a tax bill. Each year, however, millions of Americans file their taxes expecting a refund; instead, they're socked with an unexpected tax bill that can be difficult to pay.

It's worth noting that owing taxes is not inherently a bad thing. People who routinely receive large refunds are overpaying taxes throughout the year and are essentially giving the federal government an interest-free loan. "Tax refunds aren't just free money, after all," says Melanie Lauridsen of the American Institute for Certified Public Accountants.

If you've done proper tax planning throughout the year, there shouldn't be any surprises at tax time. However, common reasons for an unforeseen tax bill include improperly filling out W-4s and not withholding enough; a life event, such as an inheritance or a divorce resulting in an unexpected windfall; or incorrect payments by quarterly filers.

Whatever the cause, receiving a tax bill you hadn't planned for can be an unsettling event, especially if the amount you owe is large and you don't have the cash available to pay it out of pocket.

Here's what to do if it happens to you.

Don't panic. First, make sure you actually owe the amount you believe you owe. Examine your returns from last year to see what changes are resulting in a higher bill and alert your tax preparer so you can work together on fixing the problem. Often a big swing in tax obligations could reflect a mistake made in filling out forms. If you don't think you owe a large amount and you did your taxes yourself, if may be worth having a professional check your returns to see if you missed anything (or getting a second preparer to check the work of the first one).The simplest and easiest way to deal with the burden, of course, is to pay it immediately. If that's not possible, keep reading. 

File your taxes anyway and pay whatever amount you can. Too often, taxpayers who owe money decide not to file until they're able to cover the costs. That's the worst possible move, since failing to file can result in fees and accrued interest that can push your obligation even higher. In addition, the IRS can put liens on your home or garnish wages if you've made no effort to pay the taxes you owe.Simply filing for an extension won't get you off the hook, either. Even if you're granted one, you still owe your estimated taxes by April 15. "An extension gives you extra time to file, but not extra time to pay," says Lindsey Buchholz, lead tax research analyst at the Tax Institute for H&R Block. 

Paying at least a portion of the bill, even if it's just a token amount, is a good-faith gesture to the IRS that will not only decrease your obligation, but will also show the agency you're committed to paying what you owe, tax experts say.

Explore your options to borrow. If you don't have the cash to cover the bill, you'll have to find a way to borrow it. Here's a look at your best options:�          

Prepare for next year.  Once you have a payment plan, stick to it, and eliminate the debt as quickly as possible. Then take action to make sure you don't owe a hefty bill next year. Plug your info into the IRS withholding calculator http://www.irs.gov/Individuals/IRS-Withholding-Calculator to see how changing your elections could get you paying the right amount. "For self-employed workers, planning ahead might mean being more concerned and conscientious with making estimated payments, or setting up a segregated account so you can set aside a portion of each payment instead of letting it go into your general funds," says J.J. Montanaro, a certified financial planner with USAA.

Don't Fall Victim

To the Biggest Tax Scam Ever

 Be suspicious of anyone who calls you and claims to be from the Internal Revenue Service, federal authorities are warning.

The sophisticated phone scam has hit more than 20,000 people in almost every state, and netted the fraudsters more than $1 million.

"This is the largest scam of its kind we have ever seen," J. George Russell, the Treasury Inspector General for Tax Administration said in a statement. "The increasing number of people receiving these unsolicited calls from individuals who fraudulently claim to represent the IRS is alarming."

The scammers are telling people that they owe a tax payment and threatening things like arrest, deportation, or loss of a drivers' license for those who don't pay immediately by debit card or wire transfer.

The phone calls appear on caller ID to be coming from the IRS, and the callers usually know the last four digits of the victim's social security number.  Another goal of the scams is to trick people into revealing personal and financial information, such as bank account or credit card numbers, which the scammers can use to commit identity theft.

 
The calls will often be followed by a second call that appears to be from the police or the department of motor vehicles.

The real IRS usually uses the mail to make its initial contact with people about unpaid taxes, and it won't ask for a credit card number over the phone.

If you receive a suspicious phone call, report the incident to the Treasury Inspector General for Taxpayer Administration at 800-366-4484.

If you think you might owe taxes, call the IRS directly at 800-829-1040. You can also file a complaint with the Federal Trade Commission at www.FTC.gov.