Yikes, we've got trouble!

[snomnky]

We found out last week my husbands company is being sold and there is a 50% chance he will be laid off at the end of august. Then yesterday we found out we are being audited by the IRS and could owe 4,000 by august 15th. We don't have any debt right now and would love to keep it that way, but we will be broke come the payment to the IRS and may not have any income at the end of August. (DH is looking for a job currently) I don't really know what to do, where we can cut back and want steps we can take now to help us in the future. I am hoping some of you can give me some ideas...please...I feel very desperate and very stressed out. Thanks.

[mightymoo]

Keep in mind that if you can find another job, sometimes being laid off is a good thing - often companies offer pretty good packages when they are laying off due to a merger. I hope everything works out okay!

On the IRS, is it a full audit or did you just get an 'examination' - we've had that happen before. Got a bill from the IRS for $9000! We were panicked and almost hired a tax attorney, but we looked over our taxes and their paperwork very carefully and realized the mistake we made. We had sold some stock options DH had from his old company. Stock options are ordinary income and show up on your W-2 - so the money was already accounted for and we paid taxes for it, but we forgot to break it out later on, when the IRS compared our paperwork to that of the investment companies, they saw the forgotten sale and assumed then we hadn't paid any taxes on it and further assumed we had a $0 cost basis for the sale and sent us a bill. In actuality we owed nothing, we just reported it wrong. So look very carefully at your taxes and paperwork, don't assume that they amount they claim you owe is really owed by you. And if you did get an 'examination' asking for more information on one piece of your taxes, it doesn't mean that you'll necessarily have a full audit, if you comply promptly and can explain and fix the error or show them how they are wrong the case will be closed.

[NCHIN]

Last year I got a letter from the IRS stating that I owed $13,000.00 from my 2004 tax return. Apparently, I forgot to include the slip from the sale of some stock that I forgot about. I of course freaked out and then I took the letter to my accountant. Most of the $13,0000 was for penalty and interest. My accountant re-did my taxes. I ended up having to pay State also of course but the total was under a thousand dollars. My advice would be to take it to your accountant and have them help you sort it out. GL

[shelbean91]

If you do owe the money, you can ask for a repayment plan until things get back on track.

[UberMama]

Originally Posted by shelbean91

If you do owe the money, you can ask for a repayment plan until things get back on track.

I agree. A good friend of mine had to pay 2k in back taxes. She started the repayment plan at only $15 a month, as that's all she could afford for a bit!

[shayinme]

Originally Posted by shelbean91

If you do owe the money, you can ask for a repayment plan until things get back on track.

ITA w/this. I have been on a payment plan with the IRS for a while now and I have found they are pretty good about working with you as long as you communicate with them. I owe them a lot more than $4000 and have no problems with them. In my case it was stupidity that created the debt, dh became self employed and we didn't do quarterly taxes and basically got nailed with interest and penalties which can add up quickly.

I'd say get a payment plan and as soon as you are able to pay in full to do that. Since interest accrues rapidly with the IRS.

Shay

[shelbean91]

Originally Posted by shayinme

ITA w/this. I have been on a payment plan with the IRS for a while now and I have found they are pretty good about working with you as long as you communicate with them. I owe them a lot more than $4000 and have no problems with them. In my case it was stupidity that created the debt, dh became self employed and we didn't do quarterly taxes and basically got nailed with interest and penalties which can add up quickly.

I'd say get a payment plan and as soon as you are able to pay in full to do that. Since interest accrues rapidly with the IRS.

Shay

My parents did the exact same thing- dad was self employed, never did quarterlies- for years. Blech. They're digging themselves out for a while now.