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Discussion Starter · #1 ·
Sorry for my posting all my finacial troubles in a row. I am just really needing advise/tips/direction.

I just had my son almost 4 months ago and It seems like since then we have been bombarded with all this debt. Everyone is coming after us at once and I need help.

We are very much behind in our tax payements to the IRS. The reason for this is that my husband is self employed. We have a hard time being current with our monthy payment plan an making the estimated tax payments on time. Our debt exceeds our income, which makes it hard to pay taxes when we need food and heat. Many of us live check to check so I am sure you get the point.

So when I called the IRS last week, because I they have me calling them each week to update them, they said that we have to pay them $300 a month plus make estimated tax payments on time or else they will put a levy on our credit. I told them this offer is not financially feasible for us. I offered to pay them $75 a month and try to keep up on the estimated payments. They said that I can do this but they will still put a levy on our credit. So what is the insentive for me to make payments on time when they are going to put the levy on us anyway?

We only make $26,000 a year for a family of three. They claim we own them $16,000. We qualify for medical assistance. How can this happen when we are concidered poor enough for medical help?

Sorry for the long post, I do not mean to annoy, I just need to talk with others about how to dig out of this mess.
Thanks for your replys.
 

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Contact a tax lawyer or the local IRS ombudsman (this one is free and required to be provided to you by law). Tax interest compounds quickly with fees and penaltys added on. A good lawyer might be able to help you negotiate down. However, with the war, the IRS has become much harder to deal with.
 

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Sorry no advice, but...
I saw this and your other post and know you must be feeling pretty stressed right now. Know that everything will work out, one way or another... This too shall pass. Hang in there, mama.
 

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hugs mama definately contact that lawyer that just seems a bit off how in the world could anyone owe that much? we owed 845 at the begining of this year for three years prior and had no clue of it so they held on to it and added interest for those three years and we contacted a lawyer and only had to pay like 150 lol
 

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I don't know how you could possibly owe that much. Have you had a second accountant look over your financial records to make sure they were reported correctly? That would be my first move, and then I would talk to a lawyer and see if they could talk the IRS into making a lump sum payoff (I have heard they will do this, and it is much cheaper if you can get some kind of financing possibly against your business or assets). It's hard for me to really know without knowing if the amount owed is due to back taxes, or due to penalties. Is it including self-employment tax? That always adds on alot, and usually your employer will match your SS and Med, and without an employer you have to pay the whole amount. We have always owned our own business, and my parents do too, so I totally understand how you can be floating along all year, and suddenly owe tons of money! We always HATE tax season b/c it means we owe money! Everyone else loves it b/c they get a refund. We do make quarterly estimated tax payments now, and we have a really good accountant who has helped us. I think for any small business having a good accountant is invaluable! We try to meet once durring the year w/ him just to discuss how things are going $$-wise, and what things we need to do to be ready for April! WE also meet sometime during the beginning of the year when he gets done w/ the previous years' taxes to discuss what we could change for the current year.

Good Luck!
 

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Discussion Starter · #9 ·
^

Thanks for your help. Most of our income is from self employment which is why we always owe. We are behind a few years so we do have a lot of penalties. We struggle to make our estimated tax payments because we already live paycheck to paycheck. We are still looking for a reliable accountant, so far we have not found one. And of course we are low on $$ to pay for one.


I have been spending the past couple days looking for help.
 

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Howdy! First off breathe.


Secondly you are not alone, I am dealing with an IRS situation now, same as you my dh is self employed and for the first few years of his self employment we filed our taxes but no payments.

Long story short, that is a baddddd idea and that figure they gave you is probably right. The IRS has a very complicated system of penalties and interest that can basically make your debt increase very very quickly. Also when you are self employed you pay not only the regular taxes but self employment taxes that are higher.

Actually lawyers who handle this sort of thing are not cheap and legal aid really cannot help you. Also beware of lawyers who say they can fix this, there is a whole subset of lawyers who deal in this. Make sure if you do get a lawyer that they are authrized to deal with the IRS. However there is a taxpayer advocates office that can help you, go on the IRS website and get the #. Call them ASAP.

Also know that the IRS can and will snatch everything you own and a levy is basically taking all your money straight out of your bank account. So that alone is the incentive to work with them. Further more they can put a lien on you which makes bad credit look good.

I don't mean to scare you but the IRS is not a debt to play with, I owe then well over 30K in back taxes and went from being a SAHM to working part time. I work solely to keep the tax man off our backs.

One last thing, also know that the IRS offers you the opportunity to make a settlement on back taxes but you need to be current on your quarterly taxes. You can get the information on the website.

Feel free to PM for additional info. Beleive me I know how you feel, I have been dealing with the IRS now for 2 years and it will probably be 10 years before we are done when you factor in penalties and interest.

Shay
 

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Quote:

Originally Posted by shayinme
Howdy! First off breathe.


Secondly you are not alone, I am dealing with an IRS situation now, same as you my dh is self employed and for the first few years of his self employment we filed our taxes but no payments.

Long story short, that is a baddddd idea and that figure they gave you is probably right. The IRS has a very complicated system of penalties and interest that can basically make your debt increase very very quickly. Also when you are self employed you pay not only the regular taxes but self employment taxes that are higher.

Actually lawyers who handle this sort of thing are not cheap and legal aid really cannot help you. Also beware of lawyers who say they can fix this, there is a whole subset of lawyers who deal in this. Make sure if you do get a lawyer that they are authrized to deal with the IRS. However there is a taxpayer advocates office that can help you, go on the IRS website and get the #. Call them ASAP.

Also know that the IRS can and will snatch everything you own and a levy is basically taking all your money straight out of your bank account. So that alone is the incentive to work with them. Further more they can put a lien on you which makes bad credit look good.

I don't mean to scare you but the IRS is not a debt to play with, I owe then well over 30K in back taxes and went from being a SAHM to working part time. I work solely to keep the tax man off our backs.

One last thing, also know that the IRS offers you the opportunity to make a settlement on back taxes but you need to be current on your quarterly taxes. You can get the information on the website.

Feel free to PM for additional info. Beleive me I know how you feel, I have been dealing with the IRS now for 2 years and it will probably be 10 years before we are done when you factor in penalties and interest.

Shay
omg, you just described my situation to a "t". i owe them big and am chipping away at it slowly which is likely to take a longggg time. i totally agree with all that you said.
 

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Okay, I am an accountant and taxes are my thing. Let me just say that filling the first tax return was the first mistake -- did you know that filling taxes is voluntary? Well, it is. Why do we do it then? Mostly, working people do it to get their over collection back and working poor do it for the EIC and now we do it for child tax credit -- you know the free money. Can you go back to not filling? not easily...

I am self-employed, so I myself deal with SE Tax, which is a horrid tax IMO. I pay the government so I can work, what kind of sense does that make???

Now, I'm going to assume that you filed a form for making payments on what you owe with regard to your federal income tax due (separate from the quarterly tax pmts). They should have called you and taken into acct your expenses and made a payment that was doable. It sound like that didn't happen. Which means file another request. I was looking for the form no. just now, but for some reason I could not locate what I was looking for and I just don't have the time right now. Searching around on the irs.gov site should lend you some valuable information to help yourself.

As for estimated tax payments, once you get suckered into those, getting them removed is a nightmare. They should be quarterly and they should be based on your income from the Sch C. There is a mathmatical formula for figuring those out and you can file a form to change those.

And now, I would go back and make sure that your sch C were filed correctly, that all deductions you can take were taken, etc. Also, is your dh given a 1099-MISC?

If he is, then it's time to talk to whomever he works for as see if they can make him a W-2 employee. You're **** going to be dealing with the back tax issue, but future tax issues will be avoided. If he isn't a 1099-MISC form receiver from 1 company, then really I must suggest you get help from a compentent Tax Law Attorney, often times these are former IRS Accountants.

I receive a 1099-Misc from the company I do work for. We've discussed the pros and cons for both of us about taking me on as a W-2 employee. Mostly it comes down to right now I make more being independent from the company than I would if I were an employee. And I'm free to take my career any direction I choose as in I could take on more clients.

Also, if you have bank accts, keep them at min bal. If the IRS freezes your accts you'll have lost nothing except the ability to continue running the business, if your business relies upon cash flow.

Techinical questions - are you part of the business for IRS purposes? Do you live in a community property state?

Look up those. And look up 'endangered spouse' (I think that is what I remember it being called, it is supposed to protect the spouse's income and assets when the other spouse is indebted to the IRS but it does not work in all states last I remember -- this isn't something I deal with in my everyday life anymore). You, solely, may be able to hold bank accounts without the IRS having legal authority to take control of them -- maybe.

Breathe, try and relax, read with clarity to help yourself out of this mess. It won't be like this forever... Try and get Social Services assistance for Food Stamps, WIC, you have medical, so I'm assuming you have the others. I see your siggy, you portray yourself with a head covering, please seek help from your religious community, there may be a tax lawyer in your mist and you may not know unless you ask for help. It has taken me several years to impress upon a df that it is not only okay, but it is also expected of us to ask for help from our religious community when we needed help.
 

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In terms of getting some help dealing with the IRS, I suggest you call your state bar association and ask for their pro bono program. They might be able to find you a tax attorney willing to take on your case for free. If there is a law school in your state or city, they may have a supervised student clinic with law students who could help you as well.

My experience with the IRS is that the bullying often stops once a professional enters the picture.

The suggestion to contact the ombudsman is a good one as well.
 

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For the original poster -- is there anything you can do to make sure you'll be able to keep up on the quarterly payments while you work with the IRS on the back taxes? Perhaps you can reduce your living expenses by moving to a smaller place, or work as a babysitter to make extra money? I would also urge you to take the money for the taxes directly out of your husband's paycheck, stick it in a bank account, and pretend it doesn't even exist until it's time to pay the taxes again. I find this technique very helpful in my own life.

Good luck!

Quote:

Originally Posted by NoMariposa
I am self-employed, so I myself deal with SE Tax, which is a horrid tax IMO. I pay the government so I can work, what kind of sense does that make???
This is a total aside, but what exactly do you have against the self-employment tax? It seems to me reasonable that all persons earning income, even those who are self-employed, would be obligated to pay their social security taxes. And of course, whe you're self-employed, you have to pay the part your employer would normally pay in addition to the share you would normally pay. If you're a consultant, you can adjust your hourly rate to compensate; if you run your own business, it's one of the factors you need to consider when deciding whether running your own business is sufficiently profitable to make it worthwhile.
 

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Discussion Starter · #15 ·
Thanks for all your replys.

NoMariposa:

You said that filing our first return was a mistake, and that taxes are voluntary. I have heard this before but do not know anything about it. How does this work? Believe me, I don't want to give them any money.

My husband is self employed and received a 1099 MISC. There is no way he can receive a W2. He would have to stop being a sub-contractor and find another job (which he does not want to do).

I bascially speak to the IRS every couple weeks. They call me to "check up" on my finacial situation. They had me fill out a form (forgot what number it is since there are so darn many of them) to show my profit to debt ratio. So this is where I am currently at with them. What I offered to pay was not good enough for them so they want to tell me what I can afford to give them. haha. @ssholes. They want me to pay about $1,200 every quarter, which *might* be do-able but not with a monthy payment plan.

Thanks for all your advise. Would it be a good idea to file married but separate so that the IRS cannot come after me for the debt? Do they have to warn you that they will freeze your bank account before it happens? Should we just keep money out of the bank just to be safe? I only work part time and the other time I am in school so I am not able to work more.

I really hate dealing with this. I don't want to report to some phone jocky all the time.
 
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