Federal taxes...if you have ever had to make payments I have questions

[Tess in the Burbs]

So we know we will owe a large amount for taxes this year due to choices we made in 2011. We realize now we should have paid more toward this last year but we thought we had it covered. We didn't. We don't have the amount will we owe to both federal and state. We don't have credit cards. I did apply for one but with no income I doubt I will get it. Dh has the foreclosure on his credit so no reason to try for him, lol.

 

I know there are payment penalties and interest. Are the penalties monthly as well? Or just one time? I have exhausted my few resources to get a loan and I can't blame family for not wanting to extend an olive branch.

 

Do we just call and negotiate a payment or just send what we can each month? I personally think them just taking it would better...life happens and that money will get gone if they don't just take it, lol.

 

Anyway, any advice on paying federal taxes late would be helpful. Best case senario(us living like paupers) we won't be able to finish paying off the balance until almost October of this year. :confused: So I worry how much the penalties are going to push this out...

[nukeswife]

This is from the IRS website, maybe one of them would be an option for you (I'm thinking the 2nd one) There was also a #3 about credit or debit card, but since you said that wasn't an option I didn't add that part.

 

If you owe taxes but can’t pay the full amount by the April 18 deadline you should still file your return on time and pay as much as you can to avoid penalties and interest. You should also contact the IRS to ask about alternative payment options. Here are three alternative payment options you may want to consider:

 

1. Additional Time to Pay Based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at http:http://www.IRS.gov or by calling 800-829-1040. Taxpayers who request and are granted an additional 60 to 120 days to pay the tax in full generally will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time.

 

2. Installment Agreement You can apply for an IRS installment agreement using the Web-based Online Payment Agreement application on IRS.gov. This Web-based application allows taxpayers who owe $25,000 or less in combined tax, penalties and interest to self-qualify, apply for, and receive immediate notification of approval. You can also request an installment agreement before your current tax liabilities are actually assessed by using OPA. The OPA option provides you with a simple and convenient way to establish an installment agreement and eliminates the need for personal interaction with IRS and reduces paper processing. You may also complete and submit a Form 9465, Installment Agreement Request, make your request in writing, or call 1-800-829-1040 to make your request. For balances over $25,000, you are required to complete a financial statement to determine the monthly payment amount for an installment plan. For more complete information see Tax Topic 202, Tax Payment Options on http.http://www.IRS.gov.

[Slipper]

We had a similar problem. Dealing with state was like dealing with the mob or something. They requested we borrow from family, use credit cards, take out a loan, sell things, etc. We paid them off quickly. The IRS was super-friendly. I explained our situation, they set up payment arrangements and all was well. There was one month that we couldn't pay due to medical bills for our daughter and they let us skip without a problem. I'm not sure about interest. Honestly, I was so relieved at how nice they were that I don't think I paid attention...

[melissad2]

IDK personally but my parents made an arrangement one time where the IRS just kept their refund til it was paid off. In this instance though they usually got a refund every year but this particular year my mom received an inheritance which she had to pay taxes on and their accountant misled them and they didn't realize it til the money was used.

[goldberry]

IRS is very willing to set up a payment schedule and penalties are not too severe. Our state is not! Our cpa advised us to pay the state if at all possible. We are on a payment plan right now. It's not too bad.

 

I was afraid they would haul us to jail or something! It's not like that.

[Tess in the Burbs]

thank you, this is good to hear. I am pretty sure we could pull off paying the state money by April 15th but will be calling the IRS about payments. Good to hear they aren't mean on the phone :tongue_smilie:

[Mommyof4ks]

Have you filed yet? If you file for an extension, then you will have more time to save up the money you need. You can extend up to Aug or Oct (I can't remember at the moment).

[Tess in the Burbs]

from what I read the extension won't change the payment date...it's still april 15th and fees/penalties start then even under an extension.

[Melinda in VT]

Have you filed yet? If you file for an extension, then you will have more time to save up the money you need. You can extend up to Aug or Oct (I can't remember at the moment).

 

I don't think this is true. The extension only lets you file the paperwork late. If you owe money, the money is still due on April 15.

 

(This is my understanding from talking to my accountant. I am not a cpa and don't play one on the internet.)

[angela in ohio]

thank you, this is good to hear. I am pretty sure we could pull off paying the state money by April 15th but will be calling the IRS about payments. Good to hear they aren't mean on the phone :tongue_smilie:

 

We've been there. It's really not as scary as it sounds! Like a pp said, the state is Nas.ty. (I'm sure that varies by state, but I've heard it from many people in different states,) but the IRS is fine. Definitely pay as much as you can (after you pay the state,) and then set up a payment plan.

 

You didn't say how you plan to file, but you should get help with figuring the penalites and such because there are ways to minimize them based on your taxes from last year. And you will want to figure out how to change things so that you come out okay when you file next year.

[*lifeoftheparty*]

I messed up and forgot to add a W-2 one year, and it made us qualify for the Earned Income Credit and we got a LARGE tax refund... I was a doofus. 2 years later, they figured it out and I owed them several thousand dollars. We had enough money to pay the State portion. We set up a payment plan with the IRS... didn't even need to do it on the phone. They sent paperwork, I checked some boxes and sent it back, they sent me a bill every month. I even got to choose how long the pay off would be, and therefore the payment amount. I chose to pay it off in a year, can't remember what the payments were. It was really easy.

[Tess in the Burbs]

This is so good to hear thank you!!

[Shellers]

We've been there. It's really not as scary as it sounds! Like a pp said, the state is Nas.ty. (I'm sure that varies by state, but I've heard it from many people in different states,) but the IRS is fine. Definitely pay as much as you can (after you pay the state,) and then set up a payment plan.

 

I've actually heard the opposite, it's the FEDS that you don't want to mess around with. We owed a lot money to the FEDS so I gathered up all the money I could find, I even wrote a check using one of those credit card checks with low interest rates to pay off the FEDS. The feds will lock your bank accounts if you don't get payments arranged. My DH has friends that have been locked out of their checking accounts.

 

IRS Payment Plans & Installation Agreements - http://www.irs.gov/individuals/article/0,,id=243335,00.html

 

I'm making monthly payments to the State of CA from 2009. We owed a bunch and the state tacked on another $4,000+ in interest and penalties. Setting up payments was fast and easy.

[Hockey Mom]

You can avoid the IRS locking your bank accounts, putting leins on your house, etc. just by paying them on time. We have had the IRS automatically deduct monthly installment payments directly from our bank account. No problems at all. The people working at the IRS have always been very friendly and willing to work something out with you.

 

I live in Florida, so no state income taxes here.

 

Best of luck to you. :)

[Sandy in Indy]

Have you filed yet? If you file for an extension, then you will have more time to save up the money you need. You can extend up to Aug or Oct (I can't remember at the moment).

 

Definitely not true. An extension just gives you extra time to file the paperwork. The IRS still expects the money on April 15. Penalties and interest begin on April 16th.

 

You can easily set up a payment plan--however you don't get to pick the payment. I *think* you can choose how many months for the payments, but of course, the longer you take the more you pay in interest. Keep up the payments and you'll be fine.

[WeeBeaks]

You may not end up with penalties. Unless they changed the code (totally possible), there is some clause that if you paid 90% of what you owe or at least the amount owed the prior year in taxes you just pay it without penalty. Look carefully into that. It helped us the year our income went up quite a bit and we owed, but we had paid the amount owed in the prior year so we owed the amount in taxes obviously but not penalties because of that clause. If 2011 was an abnormal year that might work out for you.