Oh dear..We owe

[naggie1972]

What happens if we can't pay the man.

[Deleted]

call them and set up a payment plan...

Contrary to popular belief they are flexible and want to work with you.

[mwcpa]

but in any event be sure to file by 4-17-12....

Failure to file is 10 times worse (per month) than not being able to pay.....

[taxref]

The penalty for late filing is far higher than the penalty for late paying. Consequently, if you cannot pay be sure to mail in your return without a payment no later than 4-17-12.

If you will be able to come up with the payment within about 6 weeks of the due date, there won't be much of a problem. The IRS will take about that long to send you a bill, and you can pay at that time.

If that is not the case, complete an installment payment request with your tax return.

[gavinsnana]

Jan 31, 2012 17:08:00 GMT -5 ArchietheDragon said:

call them and set up a payment plan...

Contrary to popular belief they are flexible and want to work with you.

Absolutely.. Do not avoid them. Call them, they will work with you.

Also, look at your deductions.. Make sure you did not miss any. Then adjust the amount taken out of your check so it doesn't happen next year.

[TheOtherMe]

Definitely file timely or a much larger penalty kicks in than failure to pay and interest. Send the any amount you can with the return and set up a payment plan. Yes, the IRS will work with you. You didn't mention your state return, some states will work with you and some won't.

[mwcpa]

good point "otherme".... some states are easier to work with than others..... New York by example has historically been a beast to deal with, and it was not the tax departments fault, our law was (and still is) unforgiving (and that mess falls to the legislature who never takes responsibility for the laws it makes, but is first to blame those charged with administering it).... but recently they have been "lightening" up.... but not much yet....

[TheOtherMe]

I worked in CO. They will not set up any kind of installment plan, or would not when I left in 2009.

[zazu]

I assume you will wait until April 15th to file. Which you should. Send off your returns and you will recieve a letter in the mail. the letter will have a tax number on it, and you can go to the website listed on the letter and set up arragements. They will give you an automatic 120 days from the date of letter to pay.

I did this last year and it worked out fine. So if you start saving now will you be able to pay them off by September/October?

[mwcpa]

but zaza, you where hit with a 0.5% penalty for not paying on time.....
it is better to enter into an installment agreement up front...... and set up regular payments today....
and adjust withholding or make estimated payments for 2012 to not have the same issue.... IRS gets testy when the same issue comes up year after year....

[TheOtherMe]

I have to agree with mwcpa. Pay what you can pay when you file and avoid penalty and interest on that amount. Get the installment agreement going sooner rather than later. Why wait

Once you set up an installment agreement, make sure to meet your installment obligation. If you don't, the balance can become due in full. Usually part of the agreement is that you have enough withholding in subsequent years and that timely returns are filed.

[showtime]

Naggie

Also be aware. You may incur penalties from the IRS if you underwithheld too much. Considering you don't think you'll be able to pay the IRS by April 17th means that the amount is significant.
The penalty is designed so that people don't short pay on their taxes (whether it's through payroll deductions or through using a quarterly tax form).
Otherwise, many people would withhold their taxes until it came time to pay on April 15th. (i.e. having 10 dependents listed on your W2, when you have only 2 kids)
There are different levels of penalties (like if you don't file) that are much more punitive than unable to pay.
But expect to incur some levels of fees/penalties/interest that you will owe to the IRS if you can't pay by the 17th.

Wishing you the best

-Showtime

[thyme4change]

I think they have just changed the laws so anyone who can't pay their taxes by April 15th can get the death penalty.

[naggie1972]

Yeah that was funny Thyme... Working on it this weekend. I did estimate a few times during 2011 as I do but totally forgot that we can't claim DS in 2011, that is where one mistake was, the other was not changing to 4 or 3 from 6 exemptions at one time when I did an estimate, I can't even remember if I told H to change the exemptions, so was probably my fault.

I don't remember why we had 6 but I am sure there was a reason, I estimate about every quarter based on info I have at the time and I know I needed to have H change it to 4 or 3 exemptions after one estimation.

Been married 20 years and never had to pay, try to make it as close to getting no money back but have never had to pay. Live in FL so no state taxes.

[Deleted]

naggie, are you doing your tax by hand or using tax software? I would strongly suggest you use one of the free trubo tax on line products and see if you get the same results if you were doing it manually. Use the wizard that walks you through every question so that you make sure you capture everything.

On another thread you mentioned that you had a lot of medical expenses last year, so make sure you capture every part of medexp - your part of premium, copays, deductibles, prescriptions, dental work. It sounded like the expenses that were not covered were high, so maybe you will hit the 7.5% threshold and have more deductions if you are rigorous about finding EVERYTHING you paid. I scour the credit card statements and checkbooks to make sure I get it all accumulated correctly.

Did you donate any goods last year? Make sure that anything you donated to charity and have receipts for gets deducted properly.

[naggie1972]

I have been using turbo tax for YEARS, first when you bought the software now I do it all online. I don't even think I can remember if I EVER done it by hand..LOL maybe once. ;D

I have gone back into Turbo Tax and re do everything when I get new paperwork in the mail, I am pretty sure everything I was waiting on is in and entered. I had 4550.00 going to an FSA and we looted that (used it all up) in early Oct I believe.

I keep EVERYTHING so will add that up but it is not going to be near 7.5 over AGI, unless the FSA funds are included, I don't think so, they are accounted for elsewhere. Always donate my $500.00... LOL I am going through everything today that can be remotely tax related, putting it aside and will be doing the finale tomorrow.

[TheOtherMe]

What is your $500 in donations?

Medical bills paid through FSA will not be included on Sch A.

[mwcpa]

FSA reduces your wages when the funds are withheld by the employer... you cannot double dip
FSA withdrawals to cover medical expenses reduce the cost, like an insurance reimbursement...

say you put 1000 into your FSA... that is deducted from your salary... box one of form w-2 is lowered that the 1000 from what you make....
now, you spend 2500 in out of pocket medical costs and co-pay... the FSA reimburses you 1000.... you can deduct 1500 as a medical expense on schedule A (before the 7.5% haircut)

and as theotherme notes, their is no such thing as a "gimme" charity amount (if I recall correctly before 1986 there was a gimme, but that's long gone)... today (as a result of all of the cheaters out there) all charity must be supported with documentation (this is Congresses doing, not the IRS)... the old days of $10 a week in the church collection box is no longer tax deductible unless the church acknowledges the cash and you can prove you had the cash to put in (so if you never take an ATM withdrawal, where did the cash come from, the cash income that you did not report because it was not on a 1099, I sure hope not.... )

[TheOtherMe]

Feb 11, 2012 16:45:53 GMT -5 mwcpa said:

and as theotherme notes, their is no such thing as a "gimme" charity amount (if I recall correctly before 1986 there was a gimme, but that's long gone)... today (as a result of all of the cheaters out there) all charity must be supported with documentation (this is Congresses doing, not the IRS)... the old days of $10 a week in the church collection box is no longer tax deductible unless the church acknowledges the cash and you can prove you had the cash to put in (so if you never take an ATM withdrawal, where did the cash come from, the cash income that you did not report because it was not on a 1099, I sure hope not.... )

The $500 gimme was one of my biggest problems when I was still preparing tax returns for the 2009 tax season. Oh, just put down the $500 I get. You don't get anything without some kind of documentation. I was so glad when Congress passed the law on documentation of other than cash donations as well as cash donations.

[naggie1972]

As always clothes, household items, shoes, sports stuff, quite a lot to dog rescue organisations all neatly verified with bill of sale with said organisations. ALWAYS, not worth messing with the IRS. Now that I say that I will probably get my very first audit.

Someone mentioned about large medical costs so I stated that the 4550 was put in an FSA and as such would not be subject to the 7.5 (I think it is now) for medical, the money I did pay out of pocket after depleting the FSA I highly doubt would meet/come to over 7.5 AGI, but I will add everything up because you never know. We were going to do it yesterday but had unexpected guests so had some good beer instead.

Thanks all, still keep the ideas coming, would like to get that number down as legally as possible, might have to start figuring out my mileage to Doc appts and such. ;D

I suppose I could add up work expenses that employer doesn't pay or reimburse but that wouldn't get us over the threshold either I don't think (that is 2.5 AGI no?) Not looking forward to it. As it stands right now it is 2k, never owed, one of my posts states why (I think) it happened. Was so used to having DS as an exemption that it was one thing that I forgot to account for.

[TheOtherMe]

For business expenses, it's over 2% of AGI and you must itemize your deductions as it goes on Sch. A.

There is no such thing as a bill of sale to a charity. Most charities do not value the household items, clothes, etc. that you donate. They leave that up to the donor. The amount that should be deducted is generally the value that a thrift store, etc. can sell the item for. There are guides on the internet as to valuation.

[mwcpa]

naggie, as noted, be careful with the valuation of non cash items... the rules have changed over the years and gotten much stricter (due to all of the cheating over the years). Non cash items must be in good or better condition.... you must keep a detailed list of what you gave away (a "bag" of clothing is no longer good enough, you need to say what was in the bag) and values are assigned to each item... the value is not new retail, it's fire sale price, there are many website out there that can give general guidance on the thrift shop value of items (always be conservative here, remember, where does the hog end up? slaughter.... so do not be a hog....)

[naggie1972]

Okay I mistyped, from the Salvation Army a receipt signed by the guy that takes your stuff, my valuation is from the shop costs itself. Various dog rescue organizations that are designated as a 501(c) (I think it is called) a receipt of cash, and United Way from the paychecks, I have that covered, seems like it may be a sore point for some tax preparers here.

The last time I did business expenses was at least ten years ago so don't remember much about it. I understand it used to be a 'bag of clothes" but I have never cheated on my taxes and never will, tbh our charitable donations are probably more than that but it is such a figure that I have always used so just go with it and make sure I have at least that amount in documentation to back it up. I got the value from shopping in the store itself, would that not be a good valuation???

The only thing I can think of now is either the med expenses (highly doubtful) or business expenses not reimbursed (still highly doubtful).

We have the usual suspects, mortgage interest, real estate taxes, charitable donations... will just have to go over it all again to see if I missed anything. Isn't there something about IRA's???

I wonder if that energy efficient tax thing is still in effect, will have to look.