I’ve heard two stories in just as many days about people who paid one of those TV tax companies thousands of dollars to help them with their IRS debt and when all was said and done, all they got was a monthly installment agreement with the IRS. I’ve got a big problem with that–because in both of those cases, the people could have used that money to pay down their debt–and done the installment agreement themselves for free.
While not everyone can handle their IRS tax debt problem themselves, before you go sending thousands of dollars to some company with a 1-800 phone number, lets see if you can handle this yourself for free first.
The first question: Do you really owe the money in the first place? That’s pretty important. If your taxes were professionally prepared and you have a huge balance due-well you probably really do owe the IRS. On the other hand, if you haven’t filed for several years and the IRS says you owe them lots of money–there’s a good chance you don’t. Anybody does taxes better than the IRS–anybody! The CPA down the hall, H&R Block, VITA, the really bad tax place I won’t name down the street, and even my high school intern — they all do taxes better than the IRS.
True story: a couple of years ago, I had a high school intern while I was working at the big tax company. She had only been there for a couple of days, she was supposed to help with the phones, photo copies and data entry type stuff. A woman came to me with an IRS tax debt of $16,000. I took the case, but I was busy working on another return so I asked the intern to just do the basic data entry work for me. A little while later she came to me and said, “I did the data entry but I’m afraid you’re going to have to show me what I’m doing wrong.” “What do you mean,” I asked, “It’s just data entry.” “I know,” she said, “But I heard you say she owes the IRS $16,000 and on all the returns I input she’s got refunds!”
I looked over everything the girl had done. It was perfect. Instead of the woman owing the IRS $16,000, the IRS owed her $8,000. So when I tell you that anybody prepares a tax return better than the IRS–I’m not kidding. Now you can go to an IRS office and they will help you with a return–those people know what they’re doing (usually), but those computer generated IRS returns that get mailed to you are garbage. Plain and simple.
Second question: Do you owe less than $50,000? If you owe more than $50,000, you won’t be able to do an IRS streamline installment agreement. If you can pay enough on the debt to bring it to $50,000 or less, then you can still do the streamline–otherwise you are going to want to get some help with your debt. But let’s say you owe $52,000. Well, you could pay some tax company $8,000 to negotiate for you, but if you paid $2,000 towards the debt, you could negotiate for yourself and still have $6,000 more pay your debt or buy groceries or whatever.
Third question: How much can you afford to pay each month? Let’s say you got hit with an IRS bill of $6,000 and you just didn’t have any money saved to pay it. Realistically, look at your financial situation and figure out what you can afford. What’s the most you could possibly pay without causing yourself a hardship? That’s going to be your upper limit number. You need to think it through because you don’t want to commit to paying $500 a month if it means you lose your house.
Here’s the mechanics of it: In a perfect world–you should be able to pay of your IRS debt within 2 years (24 months.) So if you take that $6000 and divide it by 24, then your monthly payment would be $250. And if you can afford that–great! That’s the preferred timeline for the IRS to have you pay off your debt.
But if you can’t handle the $250 a month, you need to know that the IRS will go as far as 72 months (or six years) for you to pay off the debt. So if you take $6,000 and divide that by 72 then you get $85 dollars a month (I rounded up to the nearest 5.)
What you might want to do is negotiate the $85 payment, but then pay the $250 to get rid of the debt faster. That way you’ve got some wiggle room if you lose your job or have some other issue.
Here’s the other stuff you’ve got to know:
There is a fee of $105 for setting up the installment agreement. It’s lower if you set up direct debit from your checking account or it may be reduced if your income is low–make sure you ask about it, they won’t always tell you.
If you’re trying to negotiate a payment agreement and things are just not going your way, it’s okay to
back out before you commit. Tell them that you think you’re going to need professional help and that you will have to call them back later.
Once you do have an agreement, you have to hold up your end of it. Make your payments on time. If you’re late, your installment agreement is void and you’ll have to start all over again–including the $105 fee for setting up the agreement. (Not to mention those nasty letters they send about putting a lien on your home and levying your bank account.)
One final word, if you can’t handle the installment agreement yourself–maybe your tax issue is too complex or you’re just too intimidated to deal with the IRS, get help from a local professional. You’ll need an enrolled agent or CPA because they’re licensed to represent you before the IRS. I recommend using someone local (okay, someone like me) that you can meet with in person. Sometimes, IRS debt issues will cost a few thousand dollars to settle up, depending upon the work that needs to be done. But it’s important to know what is going to be done before you pay that kind of money out. $8,000 for something you can do yourself is too high a price. Ask questions, know why they’re charging you that much, and what you’re getting for it. You have a right to know.
Hi Doc,
The interest is added each month, yes. But it’s not that the interest for the month of December is $115.47 and the interest for the month of January is $137.63 – that’s a cumulative amount. Notice on the statement that it says the balance in December is 9,220.43 and the balance in January is 9,014.12 – so you are making progress in paying down the debt.
That said, I agree that the more you put towards the debt, the faster it will get paid off. And making the minimum IRS payment only increases their interest and penalty income. So pay as much as you can every chance you get.
Hi, I paid a lawyer 4500 to get me a settlement for my 28,000 dollars in back taxes & all he did was get me payments of 450 a month is there anyway I can get a settlement on the back taxes or get my payments lower?
Good morning Jan,
We were audited because our tax preparer/accountant was tried and convicted of tax fraud. We did our best to comply and provided all the necessary paperwork and receipts. We honestly didn’t know of her fraudulent business dealings, and our tax auditor tried (and succeeded) to find deductions for us (believe it or not….I think she felt badly for us because we were taken badly) and didn’t charge penalties. However, they say we owe $11,000 for ’12 and $11,000 for ’13. She gave us 30 days to sign that we agree with the adjustment. My question is: will signing that we agree with the adjustment negate our opportunity for an OIC?
***Also, ’14 will be submitted for audit and it looks like we will owe at least $15,000……and probably more for ’15.
Any suggestions?
Thank you VERY MUCH in advance!!
Jan,
On Dec 21 2015 at 9:38 AM ,Made the statement he ha da 6000.00 install agreement and the bill goes up each month
Your reply was that his numbers were wrong and it would not go up that much
On Jan14,2016 at 11:19 AM Leslie says about the same thing and your reply seemed to be the complete opposite
that along with the set payment of 105 then there is the penalties’ that are added on which would raise the total
Not sure which answer is correct as I was going to say the same thing
I owe a 9220.00 debt my installment agreement is for 125 a month
The problem is each month the penalty for failure to pay and the interest goes up
DEC 2015
amount owed 8,956.00
payment 125.00
FTP 148.22
INTEREST 115.47
Balance 9,220.43
Jan 2016
amount owed 8706.74
payment 250.00
FTP 169.75
INTEREST 137.63
Remain BAL 9014.12
Each month the FTP and the interest increases so you are actually paying 0 or very little on the amount owed
Like last month I paid 0 125 paid -FTP 148 -interest 115 = – 138.00 that gets added on
The IRS set the payment at 125 a month yet if that is all I pay it will never be paid off
It took me a while to figure out that each month the FTP and Interest is increased ,so at some point you could end up never paying off the debt .Just like the credit card companies
Hi Leslie,
You owe $5,000 and you negotiated a payment agreement of $85 and instead of the balance going down it went up. Arrrggghghhhh!
Part of that is that you pay a fee to do an installment plan. The installment agreement fee is $120 – which is more than the $85 monthly payment you’ll be making. So, yup, the balance did go up. And the interest is 3% and it gets compounded daily. (Daily!)
So, although $85 is a doable amount, it will take you a long time to pay it off. So the best thing you can do is keep throwing money at it. Never miss your $85 payment, but if you happen to have $100, pay $100. Anytime you can, pay extra. You will get rid of it, but the sooner you do, the better.
We owe the IRS 5,000 and agreed on a payment plan of $85 a month, and know instead of my balance going down its increasing what to do? HELP I am stressing out.
Hi Isis,
Once you land a job, and you’re back on your feet, I’d call the IRS and let them know that you’re working and ready to start paying down that debt. Usually, the IRS sends out letters reminding you that you have a balance due and that you should pay it immediately. That’s always a good time to call them and remind them that you’re currently in uncollectable status. If you haven’t touched base with the IRS since September of 2014, I’d call and just make sure you’re still in uncollectable status. I’m guessing that you still are, but it’s a good idea to make sure. It’s most likely they won’t know you’re working again until you file your 2016 tax return in 2017. So you’ve probably got some time to earn some cash before you start up that payment plan.
Hello,
I have a balance owing $10k. I called the IRS and was informed I am set on a non collectable status since September 2014. I’m currently unemployed , and have no other income . Do I need to contact the IRS to inform them of my current status? How long does the non collectable status last? I’m looking to look for work I just don’t want a surprise garnishment or levey to happen. Im lost what should I do. Thank you
Hi David,
Hmmm, those numbers do sound a bit off. The failure to pay penalty is 1/2 of one percent per month which would be $30. The interest is 3% annually, but it’s compounded daily. It works out to be about 50 cents a day so for one month would be about $15.
So you do want to talk to someone at the IRS about that. I’m guessing that it’s not $94 and $68 per month but that it’s a cumulative total – but it’s always best to make sure when looking at a statement.
But here’s something more important. At $90 per month, it will take over 6 years to pay that debt. $90 is like a minimum payment. The more you pay now, the sooner the debt is erased. And your payments are going towards the interest and penalties first so that $6,000 balance doesn’t whittle down very quickly.
So what I would do is buckle down and pay that debt down as quickly as possible. If you’ve never owed before, once you get the debt paid, you can request to abate the penalty. You can never abate the interest, but the penalty you can. It only works once, so if you’ve had tax trouble before the IRS won’t go for it.
It is hard to get the IRS on the phone. It helps to have a speaker phone and something else to do while you’re waiting. I’ve waiting well over an hour to talk with them. It’s crazy.
But I do think your bill is going up, but $162 a month seems too steep.
HI.
I was hit with a nearly $6000 tax bill from IRS this year. Could not pay it and went into an installment plan of $90 per month, which I have been paying every month for the last 6 months.
However, I have noticed that my bill goes UP each month, not down. This is because I am being charged $94 in interest each month PLUS $68 failure-to-pay penalty each month. So I don’t understand how this payment plan is supposed to help me pay off the debt when the debt is actually more than it was 6 months ago. I feel really stressed and lost over this, and it is impossible to get an IRS agent on the phone. Please advise/help. Thank you!
Hi Stacey,
Congratulations on your marriage! (I suspect he’s lucky to have you!)
You will include your income on the 433 forms. You will also claim your son in the calculations as he is part of the expense of the household.
Here’s a link that might be helpful if you’re going to try to qualify for an offer in compromise: http://robergtaxsolutions.com/2015/09/how-to-settle-your-irs-debt-for-less/
I think that will help you. Good luck.
Hi, I just got married October 16th 2015, my husband owed taxes from 5 tax periods. I filed all of his returns and am trying to set up a payment plan with the irs. I received a packet of forms to fill out 433-D and 433-F if I want to lower the payments. 298.00 is what they want, but I can realistically do 250.00. in total he owes 18,165.12 (self employed for tax years 2006,2007,2009, 2013 and 2014. Now that we are married do I add myself to the 433-F form? I’m disabled, have no debt and only a truck that is paid off. I do have an 8 year old son. We are planning to file jointly next year and maybe get an offer to compromise after that. Thank you for your time and help.
Hi Mia,
I recently answered a similar question to this on another page for someone named Betty. Here’s my answer to her: Ouch! So you know you’re going to owe. First, change that W4 today and take it to the personnel department and make sure the changes are made. When your husband gets his next check, go over it to be sure they did the adjustment.
Then I would just go ahead and make an estimated tax payment since you know you’re going to owe anyway. You can do that online: https://www.irs.gov/Payments
You really have no recourse against your husband’s company. You can make sure they feel real bad about it, but they don’t have to pay your tax. But, as my husband always says, if you don’t ask, you don’t get. It was their mistake. Maybe they’ll volunteer to do something to help you if you ask. But they don’t have to. The burden is on you to review your pay stub and make sure that you’ve got the proper withholding. (Sorry, but that’s the way it is.)
Since your situations were almost identical, I cheated and copied and pasted the answer.
Sadly, you don’t have any real recourse against the CPA. You do know now that you’re going to owe about $9000 in taxes so at least you can start saving now. Pay as much as you can now and before April 15th. Go ahead and file your taxes on time. An extension doesn’t change your requirement for paying on time. If you feel that you can pay the entire balance by October 15th, then keep making payments towards the debt to finish before then. If you need an installment agreement, then go ahead and arrange one, but the IRS will still calculate interest on your balance due. Bottom line, the sooner you pay it off, the better.
Hi Phil,
How do you know they aren’t “sticking it to me?” How do I answer that? Well, let me be honest about that, they are.
Here’s what’s going on. You didn’t file those tax returns. At some point, the IRS gets tired of waiting for you to file and they file it themselves. But they don’t give you any deductions. They don’t give you any preferred filing status. They don’t give you nuthin’. ZIP, ZILCH NADA!
So, that jump from the $44,000 lien to the $90,425 balance due? That was most likely because they filed the lien when your bill was $44K, then they filed another return for you. With no deductions at all!
My gut guess is that by the IRS standards, you owe more than $90K because they probably haven’t filed that 2011 or 2012 return yet. Who knows how much more they’d tack on then.
What to do? First, I’d file those returns. Don’t let them decide your tax bill for you. You say you’ve had W2 jobs claiming zero exemptions. Balance dues like that do not go to people with W2s claiming zero exemptions. So something is wrong here. Maybe you sold some stocks or your had self employment income. I’d wager it was self employment income and you’re getting hit with self employment tax.
You need to file those returns and claim your deductions. Here’s why-let’s say on that year 2000 tax return the IRS said that you owed $10,000. But, when you do it yourself, you show that you really only owed $5,000. Okay, that’s a $5,000 savings right there. But it’s more than that. By the time you add the penalties and interest to the $10,000 your tax bill is about $27,500! But if you only owed $5,000 then your tax bill with penalties and interest would be half that!
Maybe you’ve heard of sunset dates? The IRS can’t tax you for tax bills that are over 10 years old. So you might be thinking that you won’t have to pay anything on tax years before 2005. But you’re wrong there because you didn’t file the returns. And the taxes will never sunset if you don’t file those returns – so 30 years from now they could still come after you. So even if the IRS got your tax bills right (which I’ve been doing this a long time and that’s pretty rare) you still want to file the return just to put the sunset rules into place.
Good luck.
Hi Lulu,
You can’t be in an open bankruptcy proceeding if you are filing for OIC. So, yes, that would affect it.
Hi Jan,
My husband has been working for a company since February. When he’s tarted working there he filled out a W2, correctly I may add, and assumed everything was fine. Every other week his pay would show up in our account and we got pay stubs, which we saved, not noticing that while his SS, Medicare and CA disability was being withheld, but not the income tax.
We didn’t notice until in September, when suddenly we got hundreds of dollars less come pay day.
This is when we discovered the CPA who the company was paying to take care of the company’s payroll had just noticed their mistake and corrected it.
we have now been informed that come tax season we will owe $9000 in taxes that weren’t withheld during these months.
While we should have noticed something was wrong on the pay stubs, having filled out the W2 correctly, am I right thinking this is by no fault of our own? Can the CPA be held responsible? What would be a reasonable thing to ask of them, to be able to help us out of this situation? We don’t have $9000 that we can use to pay the taxes.
I was hoping to ask the CPA to set up penalty free installments for us, where a set sum is deducted from his paycheck every month to pay off the debt, but I don’t know if that’s totally unreasonable.
I’m so confused and upset about this whole situation..
how can i verify bill owed on back taxes years 2000-2012…. so 12 years worth about not filing but paying payroll taxes and some garnishments from irs also for 2 years. i claimed …0.. on all w2’s
they filed and lien in court for 44000 in talking to lawyer the IRS now says to amount is now 90,425.00 and some change how do i know they aren’t just making it up and sticking it to me.
I owe the IRS and am currently almost done with my OIC. I however recently discovered I owe the SBA a lone taken over 9yrs ago for a business that has since gone under. I am considering filing bancruptcy, will this affect my OIC with the IRS?
Hi Monica,
I’f got a couple of issues for you.
1. If you owe additional tax because of a mistake make by your preparer, your preparer by pay for your penalties and interest. You should at least notify her of the mistake (if nothing else to keep her from making it again.)
2. You said you owe $6000 in taxes because you didn’t include your SSD – which by my thinking isn’t taxable. At least Social Security disability isn’t taxable, although regular social security can partially be taxable. My gut reaction is that you really need to have someone take a look at this. I realize that I don’t have all of the facts, but my shoot from the hip reaction is that you might now owe $6000.
3. So, back to your question, an abatement or an amendment? You could be looking at both. An amended return to show you don’t owe the full $6000 (if anything). And, if you do owe something, a first time abatement of the penalties since you do not normally owe taxes and this is a new situation for you.
If I owe 6000 to the IRS because of tax mistakes by a tax preparer should i complete an abadement or amendment . In the nut shell it stating i didn’t state all my income pension ssd but I know i provided it. I also purchased a home
Hi Johnta,
It can’t hurt to ask. Since you’ve only had two years of tax issues and you’ve got your withholding all straightened out, I’m thinking you should be able to work something out. Good luck.
Hi Meryl,
I’m so sorry about your daughter. Nothing can ever make that right. Often, people get into tax trouble when they are dealing with major family issues like death and divorce.
It sounds to me like you have a couple of separate tax issues. Sales tax is usually handled by the state. The IRS handles federal taxes. So you’ve got some crossover here.
My best advice is to meet with a tax professional, bring her all of the letters you’ve received from the various taxing agencies, and copies of the tax returns that were filed and have them get you all sorted out.
You will have to pay for some help, but I think that in your case it will be money well spent.
Hi,
If I owe the IRS for two years in a row, and had a previous agreement with them,is there any chance they will allow me to make an agreement on the second balance? I have upped my withholdings this year and should not owe anything.
I started a yogurt store business in June 2010. Around Jan 2012 I’ve decided to close my business because my daughter was diagnosed with a very rare brain abnormaity. Unfortunately, she passed away in 2014. All this time I thought the accountant mailed the final sales tax return, however I was being told that I owed thousands of dollars to the IRS. The business was still operating for years ’til I was able to speak to one of the agents from the IRS. The only thing now is they kept telling me to just pay this and they will close the case and they didn’t allow us to get our NYS tax refund. I needed someone to help me understand the situation. I don’t have nothing to do with the money I owe them. Its too stressful thinking of what to do and who to talk to. Please someone help me. Thank you.
Hi Jim,
The first thing you’re going to have to do is file those back taxes. You can’t establish any kind of payment arrangement without having your returns filed. You can estimate your monthly payments by taking the amount you owe and divide by 72 months. If you owe $10,000, that would be about $140 a month.
If you can’t afford that, you might be able to negotiate a lower payment amount by completing a form 433a and submitting some documentation to the IRS to prove that you can’t afford that much. You should probably get some help with that.
Will the IRS garnish your second job? I doubt it, but you don’t want to take any chances. File those back taxes and get your payment agreement set up as quickly as possible.
I need some help here. I got a notice of wage garnishment through my employer that my wages would be garnished beginning next week for $2500 owed from 2009. I knew i owed this money but never got letters from irs. Guess they had the wrong address. I also have 5 years unfiled taxes. The irs is going to leave me with $192 a week. Not nearly enough for a single person to live on. I work two jobs and my pretax income is $500 weekly.
Two questions. Will the irs also garnish from my 2nd job?
How do i get the payments to a manageable level? Im thinking after i file back taxes with interest and fees i could be in excess of $10000 owed.
Thank you
Hi Susie,
Here’s where the IRS is coming from. You were married to the man back in 2005 and you filed those returns together so as far as the IRS is concerned, you owe them the money.
Now, I’m guessing that in your divorce decree, he agreed to pay the tax, right? He must have set up some sort of payment arrangement with them and since they were getting paid, the IRS wasn’t bothering you.
But now, he’s quit making those payments and the IRS is saying — “Oh, let’s go get that money from Susie!”
This is what I recommend: I think you should file an “innocent spouse” claim. I think you should qualify under the “separation of liability” claim. Here’s some more information: http://robergtaxsolutions.com/2013/06/innocent-spouse-relief/
I would do that first before trying to make any kind of payment arrangement on that tax.
Hi Lena,
I’m an enrolled agent licensed by the Department of the Treasury to represent taxpayers before the IRS. I am supposed to say, “If you have incorrectly filed tax returns, then you should go back and amend those returns and pay the proper tax to the IRS.”
Seriously, if you really did file incorrectly you should probably amend and get it over with.
But, maybe you didn’t file incorrectly, maybe you filed the right way those other years, you just would have a difficult time proving it. You don’t want to pay tax you don’t actually owe.
So, your preparer says that you would probably owe around $3500 but instead you got a bill for $8500.That sounds to me like you received the refund of $4500 already, that would make sense. 3500 + 4500 = 8000 plus some late payment penalty.
But if you haven’t received that 4500 refund and they’re saying you owe 8500–then my reaction is, “What’s up with that?” And not seeing the paperwork I’m only guessing here, but I’m thinking you got hit with a gross accuracy penalty and a civil fraud penalty.
So, if 2014 is the only year that’s wrong, I would be having your preparer request an abatement–you didn’t know you couldn’t claim them, etc. It was the first time there was ever a problem.
If you’ve been claiming kids that you have no right to claim, you might want to amend now and get it out there, to prevent the nasty penalties.
If your preparer is not an EA or CPA, you might want to talk to someone who is. You can find someone at the NAEA website. https://member.naea.org/naeassa/rflssareferral.query_page?p_vendor_ty=EA
You can type in your zip code to find somebody.
Here’s my “shoot from the hip, gut reaction” – the IRS probably went after you because somebody else claimed your kids on their 2014 tax return. It’s probably never happened before. If an auditor finds money one year, they’re more likely to go after more years. But claiming kids is a different story, unless somebody else is claiming them, there’s usually not additional audit years.
But here’s the big exception— if you are not related to the kids you claimed–not a biological parent, or aunt, or grandparent — then except to hear more from the IRS as you would have no rights to EIC.
And my other piece of advice is–if the IRS contacts you again, please respond. Even if you can’t prove your claim, respond to the notice. Show good faith. It helps.
Good luck.
I couldn’t prove my dependants after being asked to so. I did not respond to the request in fear of them going back 4 years. My thoughts were that hopefully they’d just make me pay for the current year..They have now responded. My tax person and I discussed that in stead of my receiving the expected $4500 refund I’d probably owe about $3500. BUT they came back with me owing $8500(Yikes!!) Needless to say I’m was not prepared for that…I’m not sure how to handel this because as I stated I don’t want to rock the boat and have them swim back looking at the past 4 years…What are your thoughts
I just got a bill for tax year2005 for back taxes in the amount of$11, 821.53. I did file jointly with my husband that year. But we divorced about a year later. I have filed separately since then and have paid all my taxes. The IRS has never contacted me. Now all the sudden I hear from IRS. A My ex husband, who I contacted said they were coming after me because he isn’t making his bankruptcy payments. So I am guessing he put the IRS debt into that ? I don’t know what to do. I did not agree or sign anything to the fact of this matter. Any suggestions. I’ve tried calling the IRS for several days. They say they have a high volume of calls right now and to call back another time.
Hi Helena,
I’d give it a shot. The worst that can happen is that the IRS says no. But you’ve got a good indicator that you’re going to get a yes. Maybe you won’t get that great of a deal but it sounds like your income is low and that’s really a good reason for qualifying for an offer.
You’re now withholding properly so that’s good too. One thing–you might not want to withhold too much as the IRS will wind up keeping your refund so in your case, you’re better off owing a little. Not too much–your H&R Block lady is right, you want to show good faith, you just don’t want a big refund.
Hi Heather,
Oh dear, hindsight is 20/20. What I would have done at the time of your divorce is file my own tax returns for any open years a married filing separately. How could you have know though?
Okay, so since he just filed for 2001 guess what? If he filed as married filing jointly it would have needed your signature on that return! I’m guessing you never signed it did you? Go ahead and file a 2001 return for yourself as married filing separately.
We’re talking about 2001, it’s going to take a long time to sort this out, but that’s what I think is your best shot.
If that fails–then I would file an innocent spouse claim. And–I think the fact that he must have forged your signature on the return is a good case for an innocent spouse claim.
I’m not inclined to try a payment agreement because the IRS will use your current husband’s income in trying to get you to pay. I don’t like that (and I’m guessing current husband likes it even less than I do.)
But start with filing your own 2001 return first.
I am wondering about my own tax situation. I owe around $20000 with penalties for not filing taxes between 2010 and 2013.
My job at the time was not withholding any taxes, federal or state and my W2 at the end of the year showed 0. When I asked a friend they simply said if it’s 0 that meant I was exempt and didn’t owe anything, so I didn’t file. I happened to go with my mom to file her taxes one year at an H&R Block and just casually asked the lady how do I go about being not exempt so I can get a refund, and she explained the whole mix-up and helped me file all of my returns at a really great discount.
Now I owe this large amount and the tax bills are coming in, and there’s no way I could ever pay this… I’ve used the OIC Prequalifier and it has given me a payment of $200 over the course of 5 months… That just seems “too good to be true”
I’m wondering if I file the appropriate paperwork, the 2 different forms required what are the chances of being approved for this and what are the terms and conditions? I know I have to pay on time and file on time for the next 5 years… but are there any hidden terms that I might miss and end up getting messed up with again?
I have spoken with the tax company at my job and not only do they take out appropriate taxes now, they take out an additional dollar amount as well, as the lady at H&R Block advised me to do this as an effort to show good faith on my part.
Any advice you have would be awesome. I’m 27 and don’t want this hanging over my head forever. I barely make enough with my 2 jobs to pay my bills now; if they were to garnish my checks I’d be homeless.
Hi, I was divorced in 2006 and my ex husband owed taxes for years 99- our divorce. In our divorce decree states that I was not to be responsible for the tax debt he acquired. Unfortunately he files 2001’s taxes in 2011 and the irs is after me… Why and what can I do? I am a stay at home mother with no income and remarried in 2009!
Hi Nikole,
I think the best way to keep your taxes separated from your husband will be to use the married filing separate tax status. Since you both have debt that will be taken by the IRS, that keeps your tax refund money going to the right account.
If you owe the IRS $6200, the $50 a month is less than what they will do in a “streamlined agreement.” That’s why they’re asking you for the financial information.
If you bumped it up to $87, then I think they’d go for it. But, if you still owe more than that, then no.
Make sure you get them to include whatever you owe this year in the agreement otherwise your agreement will be void once the tax records show you have another balance due.
Hi Ruben,
I have some ideas, but I don’t know if they can help you or not. I’ll tell you what I’ve got, it’s just that I’ve talked to other people with similar problems and there’s always some glitch that makes things not work. But here goes.
Idea 1: You still have to pay tax on the $8500–but you might be able to reduce the penalty IF (and this is a big if) if the amount of money you pay for medical expenses is more than 10% of your AGI. Now, you probably can’t claim your adult daughter on your tax return as a dependent. (I’m guessing that she has a job and makes too much money–even if it’s only a little bit.) But, if the only thing that keeps you from claiming her as a dependent is that she makes too much money–then you can claim her medical expenses as a deduction.
Now–even if you don’t itemize–if those medical expenses are over 10% of your AGI–then you can still use that amount to reduce the penalty that you’re getting hit with.
Remember–Don’t just use your daughter’s medical expense, add in your expenses as well. Plus your wife’s and any other dependents (if you have a wife and dependents.)
So that might help a little.
Option 2: Maybe–once again, if you had retirement money in a 401(k) instead of an IRA, since you’re over 55–if you were no longer working for that company you could set up something where you can take equal distributions for 5 years. You’d want to talk to your financial advisor about that, but it’s an option for people with retirement money still in a 401(k) that they haven’t rolled over. (I just don’t think that works for you.)
Option 3: this is sort of lame but–at least you can hold off the IRS for a while with a payment arrangement. I’m guessing that you probably owe the IRS close to $3000 all told on those taxes. You can set up an installment agreement with them to pay it off slowly. $3000 divided by 72 = $42. They’ll want at least $50 a month. You can do that until after you’re 59 and a half–that way you can take the money out to pay your IRS debt when you won’t get hit with the extra 10% penalty.
I wish I had something better to offer you, but that’s about it. I’m sorry.
I am not currently working, 58 years old and paying for my adult daughters mental health treatment the last two years which has dwindle down my retirement dollars to nearly nothing. Now I owe the IRS for all those withdraws bout $8500.00 just in 2013, is there any type of exemption or hardship negotiation that I could take advantage of to help me. My only form of payment would be to dig back into retirement to pay these fees and accumulate even more fees. On top of that my money is in a fixed annuity which takes fees right off the top. Obviously I never envisioned these circumstances but it has and I don’t know if someone can offer advice or service or the best place to turn.
hello, i currently owe $6200 in taxes and i think ill owe a litte this year. im getting married in Sept and my fiance will owe child support for about 17000. How do we keep our taxes seperate? i know i wont see a return for a long while but how do i do it seperate and also a payment agreement ive been paying $50 a month and that s all i can afford. i had to fill out a formrecently askign expenses and income ect…is it likely they will accept? I plan on upping my wihtholding next year so my return will resolve the amount quicker. any suggestions?
Hi Sean,
I don’t have enough information about your case to give you any kind of an answer. If you think you don’t owe, you need to talk to someone.
If the numbers don’t add up, you need to meet with someone who can make them work–and if they don’t work–help you get things fixed.
But do contact the IRS. Let them know you’re working on it. Have them explain the numbers to you if nothing else. Don’t delay. You don’t want them to go and levy your bank account.
I have a bill that was due ( now past due) the amount is 659.00. I don’t know how I owe this. I have never had to pay tax to the IRS. I have always received a refund. the letter I got stated that the amount I reported in 2012 was not correct. The amount was not correct I found after getting my w2 from last year in the mail today. I don’t understand how I could owe them… there is a brake down on the papers they sent me but the numbers just are not adding up. even with the new numbers It seems to me like I should be getting more money back… do I need to call some one?
Hi Brijesh,
So if you owe $20,000 from 2001 to 2007–I’m guessing that about half of that is penalties and interest. Ouch.
Here are a few thoughts, I don’t know if any of them will help your case.
1. Have you actually filed the returns yet? Often, people get IRS letters saying they owe money–and since you say it’s 2001 to 2007–that kind of sounds like you haven’t filed. Usually, I can reduce the amount owed by quite a bit just by filing the returns. One time, I helped a woman who was told she owed $15,000, but after I did the returns she had an $8,000 refund. You won’t qualify for any refunds (tax years are too old, any refund opportunity you had was missed) but at least you might reduce the debt.
2. Maybe you’ve already filed and you really owe the full $20,000–you might want to see if you qualify for an offer in compromise. The IRS website has a “pre-qualifier” to help you determine if an offer in compromise is a possibility for you. Here’s the link to check that out: http://irs.treasury.gov/oic_pre_qualifier/
3. If neither of those options are availalbe, it’s pretty hard to get any type of reduction. You may be able to abate some penalties–but given that you’ve got 7 years of taxes there, you’re unlikely to qualify for an abatement of any kind. Sorry.
Good luck.
hi,
I have to pay irs 20,000.00,for back tax,is there any thing I can do to bring that down,its from 2001 to 2007..long story
Hi Dana,
Being lost when talking about the IRS is pretty normal.
There is something called an offer in compromise–that’s the “pennies on the dollar” deal where you negotiate a payment of the outstanding tax bill. Usually, you don’t file an offer like that because companies that prepare the paperwork for you charge so much, you may as well just pay the IRS bill.
That said, that might be something to consider, just don’t hire one of those $8,000 firms. Here’s a link to see if an offer is something to even think about. http://irs.treasury.gov/oic_pre_qualifier/
I think people would save thousands of dollars using this tool before calling a tax company. It’s not perfect, but it’s a pretty good indicator of if you have a chance or not.
Another thing that you might want to do is just wait it out. After 10 years, the debt drops off. There’s no way for your husband to pay the debt, so that might be the best option. You can call the IRS and they will give you the date the the debt becomes uncollectible.
I’ve noticed that although the IRS will drop old debts, some states (like Missouri) won’t. So if you have any state debt, that may still hang over your head.
You can file bankruptcy, but once again, the cost might be more than the debt. And, if you don’t complete the bankruptcy, the whole debt get’s added back and the amount of time you were in bankruptcy get’s added on to that 10 year term–so just be aware of that.
I hope that helps a little anyway.
Hi, Is it true that some times you can get a “one time” deal where they wipe your debt clean from IRS if you never work or file again after that..I hope that made sense…My Husband was working and paying on an old debt of like $4,500 to the IRS then he was injured and disabled at work and has since filed for SSI and its been almost 7 years now and the debt has gone up to like $6000 with fees cause he hasn’t paid since his injury and we are trying to figure out a way to clean this off hi record for good because he is no longer able to work and/or have a tax return..can you file bankruptcy on taxes?..uhg i’m just lost!..please help.
Hi Dustin,
So you received an IRS notice saying that you owe $6018. I’m guessing that the bill is probably right, but just to be on the safe side, I recommend having someone take a look at it. Even if it’s just going to the local H&R Block office for one of those second looks. Although IRS notices about owing for a retirment payment are often right–the IRS makes so many mistakes I hate to have you pay more than you owe.
But let’s assume that’s the right number anyway. For $6018–the IRS would expect you to be able to pay that off within 72 months under their “streamlined payment agreement”. $6018 divided by 72 is $83.58. The IRS would expect you to pay at least $85 a month. Is that something you can handle? If yes, then go ahead and set up your agreement.
If cash is tight and you really can’t muster up $85 a month, then you’ll want to get some help. You’ll need to fill out a form 433 and show the IRS bank statements and copies of bills and things like that.
I highly recommend coughing up the $85 a month if you can do it.
That said, paying more will pay off that debt faster, and the soone you unload it, the better off you are.
I received an IRS bill in the mail stating I owe $6018 from a mistake on my 2011 taxes where I received a payout from my retirement fund. I don’t have the money to pay this off at all, and would like some advice on how to best handle the situation. Any advice would be great
Hi Kimberly,
First things first–you’re intimidated by the IRS. So don’t deal with them yourself. You’re a good person–okay so there was a mistake in your taxes. Don’t be intimidated. Easier said than done. If you are intimidated–don’t go it alone.
That said, an attorney can be really expensive. But also, you don’t want to use one of those fly by night “pennies on the dollar” firms either. You just need an EA or CPA. Here’s a link to find an EA in your area: https://portal.naeacentral.org/webportal/buyersguide/professionalsearch.aspx
You’re not looking for a whole debt deal (which can run anywhere from $2000 to $8000 dollars.) You just want someone to be with you to help you make the phone call. So maybe two hours worth of time–$200 – $300. I just want to get you into the right frame of mind price wise.
Now–you might even want to try this on your own with a gutsy friend or relative. Use a speaker phone and have your moral support with you. It’s worth a try. If you’re not gettin what you want, back off and say, “I’m sorry. I’m going to have my representative contact you.” This buys you time to get professional help if you need it.
Now, the first thing I would do is make sure you really don’t qualify for the first time homebuyer credit. That’s job one. Really. You wouldn’t have applied for the credit if you hadn’t bought a home. First time home? Were you just missing some documents? Just checking.
Okay, so lets say you really owe the money. Have you ever had a tax problem before? If not, you should request an abatement of penalties. It might not fly, but worth asking for.
From there, it’s all down to negotiating the installment agreement. You’re probably looking at a minimum payment of around $160 a month. Is that even possible for you? If yes, you’ll be okay. If no, you’ll have to prove you don’t have enough income.
If you need help, get help. If you can go it alone, good for you. Do what works for you. Good luck.
Help, I am intimidated by the IRS. I don’t know if I can or should negotiate with the IRS or if I should get an attorney….
You see in 2008 my tax consultant suggested that my husband and I qualifed for the New Home Buyers” tax credit”. Unfortuanately I didn’t ask the right questions. I didn’t realize it was not a “credit” at all it was a LOAN. That year we owed the IRS approx. $4000. So part of the “tax credit” went to pay the tax we owed the other part helped us with our debt.
Now I find out that I was not entitled to this “tax credit” and the IRS says I now owe them 11,100.00 which is the amount they gave, the about we gave to them and late payment, interest etc.
What do I do?
If I could just pay them back the $7500 minus the $500 I have paid back to them (last year $250 and the year before $250) I would get the money and pay it in full.
Is that even possible or will the IRS NOT work with me on this issue?
I would so appreciate any advice you can give….
Kim
Hi Jimmy,
Congratulations on getting on the Ticket to Work program. This is what I think you should do. Go directly to one of those IRS walk in centers. Here’s a link to find one nearest you. http://www.irs.gov/uac/Contact-Your-Local-IRS-Office-1
You’ll want to go see them in person, bring a copy of your social security disability check, bring your bank statement, and some copies of your bills. Let’s face it, at $950 a month–you’re not out there partying it up.
You might be able to get on the “currenly uncollectible” program. It will get the IRS off your back for awhile until you’re actually making some money. Now if you can afford to pay them something–maybe $50 a month, that would be easier on you than the $200. It looks to me like you could make a pretty good case for yourself.
Here’s another thing–the debt you owe, is it really money you owe or did the IRS file returns for you because you never filed? If the IRS did your returns, you might not owe as much as they say you do. Always make sure you check that out.
There are lots of good people who work at the IRS and hopefully you’ll get one of them. If you are not getting the assistance you need, it’s okay to say, “Excuse me, I think I’ll need to get some professional assistance.”
But really you do have a special situation and it’s worth asking for some assistance. Good luck.
I have been on full social security disability since 2004. However i have recently started the process of returning to work through the social security ticket to work program. my disability check was already being garnished for $200 a month for old student loans cutting my monthly check from $1,350.00 a month to $1,150 per month. Then just as i started getting the wheels of the ticket to work program rolling the IRS starting garnishing my check for another $200 a month reducing my montly check to $950.00 a month. The IRS garnishment is for taxes owed from the early and mid 90’s. As many have found out when you have not worked in a long time it cost money to return to work, in my case the biggest expense being getting my commercial drivers license again. As of right now the garnishments are making it very difficult to come up with the up front money it cost to return to work.
Is it possible for me to get free or low cost legal help with this through the Pro Bono act or another simular service. I do want to return to work full time, but having a hard time getting there from here. Any advice will be greatly appreciated…Thank-You