Overwhelmed, no way to pay off debt

[msomnipotent]

I fogot what the exact amount was, but I have owed the IRS more than $40,000. It may have been around $60,000, but my brain gets foggy. They are surprisingly easy going with payment plans. We were paying $100 per month because they could see that we cashed out our retirement savings and had no salary coming in. You can try to call them and ask, but I was told that we just fill out a form with a check for the first payment and installment fee. They would contact us if the payment was unacceptable. I'm not sure how much the fee is now, but there is a fee for installments.

I would double check the tax return. I have caught errors in my forms when the pros did it. One "pro" got irate when I pointed out 3 deductions that he missed and then overcharged us. It took several years to go back to a pro and find one that I trusted. I still double check her work.

Do you have any resale shops around? I read about people buying things from Goodwill and selling for a profit. I have bought things from people on Craigslist and bookoo and sold it later for more money, but it is a lot harder to do it that way.

Edit to add--You might want to look into the IRS Fresh Start program or try an offer. https://www.irs.gov/newsroom/irs-fre...ho-owe-the-irs

[LivingAlmostLarge]

I talked to an accountant yesterday and it looks like I will end up owing the IRS something around $6K so that's something I'm going to have to figure out.

As for the kids and sports, I am not asking them to stop playing. I truly believe it keeps kids out of trouble and my kids work very hard in school and are straight A students and I'm not taking that away from them. This summer I will try to find them part-time jobs but none of them drive so it will be hard to manage. I live in a very small town and there aren't too many jobs within walking distance. And to the question of their ages, my daughter is 17, son is 15 and youngest son is 14. My daughter isn't driving yet because I can't afford drivers ed so she might wait until she's 18 to get her license.

Jennifer

The IRS will take payments. Call them and they will work with you.

Second, your kids are old enough to earn money. They should get jobs and that will take the place of sports. You are in a situation of being negative every month that sports have to take a backseat. Perhaps if they can do it for free fine, or if they have to finish out the school year. But otherwise it's time right now April to be applying for summer jobs. The boys can cut grass, weed lawns, washing cars, the hunt is on. Even babysitting! What are they doing for the summer? If you say camps or sports I'm going to ask why?

You are sinking in debt and I would think that they would prefer to have a mom not getting further in debt than sports for fun and then sinking further into CC debt. I certainly would have.

[disneysteve]

Another thing to consider is starting some type of family home-based business. I have a friend who lives in a small town in Alabama. Last year, she started making and selling soap. She started small, selling to friends and family, and quickly expanded to selling online and she's doing pretty well. Find something that all of you can work on together to help support the family and the kids' activities. That way the kids are contributing and you don't have to take time away from them to improve your situation.

[Gailete]

As for the kids and sports, I am not asking them to stop playing. I truly believe it keeps kids out of trouble and my kids work very hard in school and are straight A students and I'm not taking that away from them. This summer I will try to find them part-time jobs but none of them drive so it will be hard to manage. I live in a very small town and there aren't too many jobs within walking distance. And to the question of their ages, my daughter is 17, son is 15 and youngest son is 14. My daughter isn't driving yet because I can't afford drivers ed so she might wait until she's 18 to get her license.

I grew up poor and from a 'broken' home when they were rare back in the 60's and 70's. I always knew that there were things that we could not afford -- that was things that consisted of costing money. If it cost don't even bother asking about it. I was also a straight A student and that shouldn't have anything to do with whether a kid plays sports or not. I was on the girls’ basketball team my senior year. Because we were a rural school there was an 'activity bus' every night after sports practice, drama practice, etc. to get kids home. My mother never came to a single game of mine or provided transportation to any game. At that point she was also doing a lot of care of my stepfather who had RA before the good meds came out to control it. She was busy enough without chasing all over the place to watch kids at sports especially since she hated sports, probably spurred on by my father that even when we were near broke would take the tail end of any money to go to a game even with children at home that needed food. I grew up without an allowance, I wore homemade clothes either made by me or my mom. We cooked our meals every night - mom or me. We all pitched in on doing housework, and I was extra helpful at that point in time as my older sister was married, my older brother elsewhere and my younger brothers were about 4 & 6 years younger than me. I may not have been getting to do the 'luxury' stuff, but by the time I graduated high school (summa cum laude by the way) I also was completely capable of running my own household from cleaning to cooking, gardening to canning, all of it. The only thing I couldn't do yet was drive a car. Didn't get my license until I was 23.

Some things for teens are not guaranteed. Many teens don't play sports and survive and they excel at other things. You can't make excuses for why you need everything on your budget. You can't give every spare minute of your free time to chauffeuring kids and sitting at ball games. Unless with your kids getting jobs to contribute to the family budget, THEY are the ones that should be job hunting for them not you, or do you expect to help them find their jobs when they are in their 20’s? Even small towns need babysitters and BOYS can babysit as well. My son did and the kids he watched loved him. There are oodles of ways to make money on line that your kids can help with. You may not find huge amounts, but in your situation every little bit helps. In the days of my worst financial life I got to the point that whenever I could shave a dollar off something I put it in an envelope. In about a year I had enough for a new pair of glasses and paid cash! My spendaholic husband eyeballs almost popped out when he saw that cash and if he had known I had it, it would have been gone as there would have been something to use the money on from his perspective. I got the idea of savings those little bits from a book called How to Get What You Want In Life With the Money You Already Have by Carol Keeffe . Request it via interlibrary loan if your library doesn’t have a copy.

One of the biggest things that you will need to do is to change your mindset about what are needs and wants. That nothing can be challenged as to cost, such a cell phone for each kid. This is the only generation of kids that had cell phones of their own. Suddenly no one knows how to deal with life without one, but up to 20 years ago, most people didn’t have one or even a need for one. This is an expense that has to be fully justified, and if justified, then you need to find a way to do it cheaper. Everything that you think you need has to be investigated for a cheaper way to have it.

[~bs]

time to go on a major diet. sad to say, but things like sports for school cost money, and should be axed if you cant make basic ends meet. There has to be intramural or other free options for your kids to keep playing and practicing their respective sports, and without major time commitment from you.

if your kids are mature enough, they will understand. Kids in general aren't stupid. They know what's going on already. Life aint easy as a single parent, and everyone in the household may have to chip in to make things work. Yeah you want the world for your kids (what parent doesnt???), but reality trumps dreams, unfortunately.

Are you on child support, alimony, welfare, food stamps, section 8 housing, everything you're eligible for? If you haven't checked, now would be a good time to do so. Off the top of my head, in my state, single income that low with kids would qualify for food stamps, and probably a host of other benefits.

jawhite gave some good tips. Your expenditures could be halved or more with proper budgeting and spending.

[sblatner]

What kinds of expenses are for the sports? Maybe the school can help if they are through school. Our school had sponsorships for some of the costs (uniforms, etc.).

[jawhite]

Saw the accountant and it's worse than I thought. I will end up owing the IRS $8K with what I have to pay back and interest and penalties. He said there is a chance they may waive the penalties but not to count on it. I have to pay the state about $250 and they want their money right away so I have to pay that. He's still working on 2015 and 2016's taxes then I'll know the final amount. He also looked at my divorce decree and said I'm getting screwed big time with the way it's written out. He suggested I take it back to an attorney ASAP and get it fixed or else my ex gets most of the tax benefits even though I pay more for them, even with the child support, which I won't always get. So I need to start planning for that too when it ends in 4 years. More than likely all three kids might still be on my health insurance or living with me and I won't get his help for anything.

All that said I'm not giving up. I have been shopping for cheaper cell phone plans, insurance, internet, etc. I'm also looking for a part time job and until I find one I will devote at least 8-10 hours a week to money saving ideas or work from home stuff. One way or another I need to reduce expenses and increase income. I did try applying for state assistance for medical, etc and was denied because I make too much. I'm also gathering up anything and everything I can sell and am having a yard sale in May. Hopefully that will bring in a good amount.

I tried talking to my daughter about getting a job this summer and she got very upset saying she didn't want her whole summer ruined. I thought I was doing a decent job raising them because they get good grades and stay out of trouble but obviously she has some entitlement going on that needs addressed. The boys work hard though and always do odd jobs throughout the summer. They also do more around the house and aren't lazy. She's more difficult though and we fight a lot and anytime she thinks I'm being too hard on her she threatens to go live with her dad. So of course I back off because I don't want to lose my child. Been like this since the divorce too. I will keep praying we resolve this and find a way to work together as a family.

Thanks again everyone for the great advice. I used to be extremely frugal when we were struggling with the business but have since lapsed on those ways. I know what I need to do and maybe it looks overwhelming right now but I am not a quitter.

Jennifer

[Thrif-t]

You got this Jennifer, hang in there! Don't let your daughter get you down. I swear sometimes I don't know where my kids come from because they're nothing like me! I always say they are a product of their environment. But then sometimes they will surprise me and act or do something like me. So I think they are taking it all in and when they are on their own and more mature they'll be more frugal.

Kids are just naturally selfish..most of them, not all. Just try to keep the lines of communication open with your daughter and speak kindly to her about needing her help, I'm sure she'll think about it and come around.

I can't imagine to know what its like to worry about losing my kids, but it does sound like she may be using that over you and you shouldn't let her. If she wants to go live with her dad, go! I know easier said than done but try.

[james.hendrickson]

Saw the accountant and it's worse than I thought. I will end up owing the IRS $8K with what I have to pay back and interest and penalties. He said there is a chance they may waive the penalties but not to count on it. I have to pay the state about $250 and they want their money right away so I have to pay that. He's still working on 2015 and 2016's taxes then I'll know the final amount. He also looked at my divorce decree and said I'm getting screwed big time with the way it's written out. He suggested I take it back to an attorney ASAP and get it fixed or else my ex gets most of the tax benefits even though I pay more for them, even with the child support, which I won't always get. So I need to start planning for that too when it ends in 4 years. More than likely all three kids might still be on my health insurance or living with me and I won't get his help for anything.

All that said I'm not giving up. I have been shopping for cheaper cell phone plans, insurance, internet, etc. I'm also looking for a part time job and until I find one I will devote at least 8-10 hours a week to money saving ideas or work from home stuff. One way or another I need to reduce expenses and increase income. I did try applying for state assistance for medical, etc and was denied because I make too much. I'm also gathering up anything and everything I can sell and am having a yard sale in May. Hopefully that will bring in a good amount.

I tried talking to my daughter about getting a job this summer and she got very upset saying she didn't want her whole summer ruined. I thought I was doing a decent job raising them because they get good grades and stay out of trouble but obviously she has some entitlement going on that needs addressed. The boys work hard though and always do odd jobs throughout the summer. They also do more around the house and aren't lazy. She's more difficult though and we fight a lot and anytime she thinks I'm being too hard on her she threatens to go live with her dad. So of course I back off because I don't want to lose my child. Been like this since the divorce too. I will keep praying we resolve this and find a way to work together as a family.

Thanks again everyone for the great advice. I used to be extremely frugal when we were struggling with the business but have since lapsed on those ways. I know what I need to do and maybe it looks overwhelming right now but I am not a quitter.

Jennifer

Can you hold a garage sale to come up with the $250 to pay the state?

That is a fast and easy way to raise some quick cash. It can also be a fun family activity if you get some friends or neighbors involved.

Also, have you considered calling your daughter's bluff the next time she threatens to go to her dad's house? Why not say something like "well if thats what you need do, I'd be happy to drive you, but this is obviously something important to you, so lets talk", or something along those lines.

Parents should not be threatened by their kids, which is what is what this situation kinda sounds like.

[Petunia 100]

Saw the accountant and it's worse than I thought. I will end up owing the IRS $8K with what I have to pay back and interest and penalties. He said there is a chance they may waive the penalties but not to count on it. I have to pay the state about $250 and they want their money right away so I have to pay that. He's still working on 2015 and 2016's taxes then I'll know the final amount. He also looked at my divorce decree and said I'm getting screwed big time with the way it's written out. He suggested I take it back to an attorney ASAP and get it fixed or else my ex gets most of the tax benefits even though I pay more for them, even with the child support, which I won't always get. So I need to start planning for that too when it ends in 4 years. More than likely all three kids might still be on my health insurance or living with me and I won't get his help for anything.

All that said I'm not giving up. I have been shopping for cheaper cell phone plans, insurance, internet, etc. I'm also looking for a part time job and until I find one I will devote at least 8-10 hours a week to money saving ideas or work from home stuff. One way or another I need to reduce expenses and increase income. I did try applying for state assistance for medical, etc and was denied because I make too much. I'm also gathering up anything and everything I can sell and am having a yard sale in May. Hopefully that will bring in a good amount.

I tried talking to my daughter about getting a job this summer and she got very upset saying she didn't want her whole summer ruined. I thought I was doing a decent job raising them because they get good grades and stay out of trouble but obviously she has some entitlement going on that needs addressed. The boys work hard though and always do odd jobs throughout the summer. They also do more around the house and aren't lazy. She's more difficult though and we fight a lot and anytime she thinks I'm being too hard on her she threatens to go live with her dad. So of course I back off because I don't want to lose my child. Been like this since the divorce too. I will keep praying we resolve this and find a way to work together as a family.

Thanks again everyone for the great advice. I used to be extremely frugal when we were struggling with the business but have since lapsed on those ways. I know what I need to do and maybe it looks overwhelming right now but I am not a quitter.

Jennifer

The bolded makes no sense to me, Jennifer. Child support and custody is always renegotiable, but the property settlement part of a divorce, once final, is FINAL.

Is your ex a reasonable person? I still think you and he should forget about amending past returns and let him claim the kids in the future. Does he even qualify for EITC? I assume that is why you will owe so much; not claiming the kids means you have to repay the EITC. Why not instead ask him to prepare his tax returns and see what claiming the kids would have saved him, and you can just pay him that. If he does not qualify for EITC, the amount it saves him will likely be far less than 8k, with no interest or penalties.

Why do you need to amend consecutive tax years? Didn't you say you are supposed to be claiming them alternate years? If so, then either 2015 or 2016 was your year to claim them, wasn't it? Why must both years be amended?

[Gailete]

It has been awhile since I was going through what you were regarding the child custody/support and taxes. Rather than flip every other year, I think we ended up with him taking the youngest as a deduction and me taking the oldest since he spent more time with me anyhow. Because he was the one that filed for the divorce, he at the same time declared he wanted the house, and the kids. I learned that in my area, whoever files first tends to get what they ask for. I had to work to get rid of the first custody ruling. I had to pay him support. And that was the whole reason he wanted them, since I was still the one that took off work when they were sick, took them to the doctor, eye doc, dentist and the youngest the orthodontist. But I fired my lawyer and took him back in front of a mediator. Because he is an idiot, during the proceedings, he stated "I don't care where they live, I want custody"! Read this to say, "the kids can live anywhere, I just want that support check!" I walked out with both joint custody and no one paying anyone for support. Without a lawyer to ‘help’ me.

I was stunned the first year when I discovered the IRS rules for how to deal with child support, etc. It is not necessarily logical in the least. So what folks that haven't gone through it might think, doesn't mean that is how it goes. It also depends upon what state the couple are living in, especially where the children live. It sounds like in this case Jennifer is doing the right thing to have an accountant to help her out with all of this. While I didn't run into the same problems she did, I know with my final decree, they used the wrong formula for calculating my share of his pension, so that had to be amended but it didn't change the amount.

All these things are mind numbing, financial holes that you feel you are pouring your life and money into. You have my sympathy. I don't know what the current rules are anymore, but I am very happy that I am past that point in my life. Anything I can do to help, just ask. I’m not sure how having a job for the summer is going to ruin her summer. It is going to feel a whole lot more ruined when she doesn't have two pennies to go hang at the mall with friends, or money to chip in for gas, or anything else that costs money since she won't have any.

[Petunia 100]

At the time of my divorce, my children were 10 and 15, so I have been through it. Having been a tax preparer for 20 or so years, I have also read the rules for claiming dependents once or twice. The IRS absolutely allows parents to swap years, provided they are in agreement. If it wasn't allowed to swap years by agreement but instead strictly follow dependency rules, it sounds like Jennifer would be the one claiming them anyway as she is the one providing more than half of their support.

The key of course is...will the ex agree?

[Kaoru]

Sorry to hear that.

Personally, I have never faced such a problem and I can't imagine the things that you have been through. I hope that everything will be alright soon tho!! Keep your chin up!!

[jawhite]

The way the divorce decree reads it says he takes our oldest (daughter) every year and I take our youngest (son) every year. We alternate the middle child until the oldest can no longer be taken as a deduction. At that time he gets the older boy and I get the youngest. Then when the older son graduates we split the younger. Problem is he will get every deduction for my daughter, then every deduction for our oldest boy after that and then we split the younger. I can't quite wrap my head around it either but the accountant said I need to have it re-examined.

As for why he gets his way with everything it's because he threatened my life when we divorced. He was verbally abusive and so I pretty much gave up my rightful half to everything of value. The only thing I got was the child support (because it was state mandated, he made more money and I pay their health insurance). I could take him back to court for his half of the other expenses but truthfully I am still scared of the man. He tried to take full custody of our daughter (then 13) during the divorce and told her to lie on the stand. He told me he would destroy my life if I left him and he's been trying ever since. He lets the kids do whatever they want when they are with him so I am the unpopular parent by asking them to do chores and having rules in my house. Then when they complain to him about it he sympathizes with them and said I was mean to him too. He's playing a game I can't win. Hopefully someday they will see the truth of things but for now I have a mess on my hands that I'm trying to fight through. The only option for me is to dig myself out of debt and move forward with my life.

I am planning on having a yard sale in a few weeks and I will sell everything and anything I can, including the stuff he left behind 3 years ago that he doesn't have the room for storage. I know I am going to unleash his fury but I am desperate to get out of this trouble with my finances. I did ask him about him taking the EITC the next 3 years to offset my mistake but that means he would have to owe the IRS and since he didn't file for the last several years he would be the one paying the fines and interest, something he refuses to do. He won't work with me at all on this, though he said he didn't mean me any harm by it. But he has shown up at work and my house several times and keeps calling me asking if I've re-filed them. I had the money for 2017's state amended return but not 2015 and 2016. If he would pay me his half for the kids expenses I could pay those but if he doesn't then I will have to borrow the money from somewhere.

Despite the financial trouble I am in now I would go through with the divorce again in a heartbeat. I don't want to even think about him ever again (though he leaves me in a bad position all the time). My only focus now is creating a good life for myself and kids. As for my daughter she will be 18 in one year and in college so I will do my best to keep things calm between us. If she refuses to work then I will refuse to take her anywhere or buy her anything other than necessities. If she chooses to live with her dad she will regret it because that's what changed her mind 3 years ago. She tried it out and he made her his substitute wife who did all the cooking and cleaning. She stopped doing it and now my older son maintains most of the responsibility. I can't control what goes on in his house but I don't agree with it. All I can do is try to instill values and responsibility in them to the best of my abilities.

[jawhite]

The bolded makes no sense to me, Jennifer. Child support and custody is always renegotiable, but the property settlement part of a divorce, once final, is FINAL.

Is your ex a reasonable person? I still think you and he should forget about amending past returns and let him claim the kids in the future. Does he even qualify for EITC? I assume that is why you will owe so much; not claiming the kids means you have to repay the EITC. Why not instead ask him to prepare his tax returns and see what claiming the kids would have saved him, and you can just pay him that. If he does not qualify for EITC, the amount it saves him will likely be far less than 8k, with no interest or penalties.

Why do you need to amend consecutive tax years? Didn't you say you are supposed to be claiming them alternate years? If so, then either 2015 or 2016 was your year to claim them, wasn't it? Why must both years be amended?

He is self employed and needs as many deductions as he can take or he will owe and he will be the one in this mess. Because he qualifies for EITC (he lies about how much he makes and does a lot under the table) he needs that to offset what he does show as income, thus getting a return and not owing. Because of this he won't allow me to pay him what he would get in that credit or take them the next 3 years. I did ask him to have his accountant see if he could rework it to come out that way and he refused.

The mistake I made was I did the child tax credit correct for all three years but answered the question about how many months the children lived with me as 12 and it gave me the EITC for all of them all three years. I am only supposed to get it on the kids I claim that year.