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Owing taxes and unable to pay...what to do?

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    Owing taxes and unable to pay...what to do?

    I may owe taxes this year, and not sure what is the best approach;

    File taxes and wait for a bill and try to set up a repayment
    Plan.

    File taxes a little bit later when possibly able to pay the taxes?

    I have no idea just yet how much I may owe, but I'm thinking around $2,000 or more. Right now I'm struggling to
    Save money for at least 3 months of living expenses.

    Is the IRS willing to do a payment plan? I'm just worried about them garnishing my wages
    For back taxes.

    And how much is penalty for not being able to pay taxes when first filing? I'm literally afraid to file.

    #2
    Wait, you're striving for 3 months expenses, but you don't have $2,000? Or you have it, and you don't wanna reduce your EF to pay it?

    Here's info about the penalties that apply:
    IRS Tax Penalties & Interest: Late Filing, Late Payment, and Interest Penalties

    Straight from the IRS:
    Filing Late and/or Paying Late

    You may also be able to file for an extension:
    Publication 17 (2011), Your Federal Income Tax


    I'd speak to a tax professional about the implications of doing so. Not sure if you can avoid all the penalties, or not.

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      #3
      I think I owe around $2,000 or more, and I definitely don't have it, and currently focused on meeting living expenses and saving at least 3 months of emergency expenses. Thank you for the links.

      Comment


        #4
        The IRS will work with you, more than the prevailing "wisdom" says they will. Been there, done that. Worst case scenario: you don't pay at all this year, they take any refund you have coming next year - plus interest. It's not 6 months in solitary like most people think. You WILL have to pay eventually, though. The links provided above are your best starting point.

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          #5
          ^ What Nightfly said.

          Don't fret. Just try not to owe next year.

          Comment


            #6
            While you may not be able to pay immediately, you need to know how much you owe. I suggest it is in your interest to at least file a basic form, any errors can be corrected later and you will avoid being charged penalties for late filing. Whatever your circumstances, you can make arrangements for monthly payments and therefore reduce accruing interest charges.

            Not filing and letting the days slip by does not help you, it makes a problem get a whole lot bigger.

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              #7
              I agree with Snafu. Better to file something and make a small payment than to not file at all. Or, file an extension. You are supposed to pay what you think you owe with an extension, but again, just pay a little. Not sure but there may be penalties for not filing by 4/15.

              Comment


                #8
                IRS.gov

                Click "+More" Under the Tools bar.

                Click "Online Payment Agreement"

                Fill-out the information and see if you are approved for a payment plan. Otherwise, call the number at the bottom of the last screen and speak to a representative. The IRS is being a tad more flexible with arranging payment plans this year.

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                  #9
                  i just got back from a cousins house and today(sunday) he is going down to sign papers for a $16000 loan to pay uncle sam, he cashed out his 401K last year to the tune of 240K and has absolutly nothing to show for it except some furniture, new flooring, a ford truck and more chrome on his harley's - doesn't even have 16K in the bank to cover his tax liabilities.

                  first question is what kind of loan company opens on sunday, im thinking the only loan is some kind of collateral loan. im also thinking his tax obligation is less than 16K and he will be doing some more frivilous spending.

                  never seen this kind of out of controllness except for our own gov't
                  retired in 2009 at the age of 39 with less than 300K total net worth

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