Egads! I owe the IRS 7k

[Rukh O'Rorke]

I did file an extension in 2017, but then October was all crazy and once I miss a deadline, what's another 6 months? 

[raeoflyte]

Apr 16, 2019 10:39:54 GMT -5 Rukh O'Rorke said:

Apr 16, 2019 10:32:03 GMT -5 raeoflyte said:

If they owe you money, they don't care if you ever file though?  

there are no fees or penalties if you don't owe them money.

Leastwise, wasn't ever before. As I said, I've been a year late twice before, never had anyone say anything to me or charge anything.

Last time it was about 7-10 years ago - so it could have changed.

That's my understanding.  I was late filing 2017 as well, but with a big refund coming to me they didn't care.  

[Deleted]

If you get a call from the IRS it's always a scam. They only contact you via mail. 

[MN-Investor]

Apr 16, 2019 10:37:28 GMT -5 Rukh O'Rorke said:

Apr 15, 2019 19:53:20 GMT -5 minnesotapaintlady said:

I was going to say, as long as you paid in as much as you owed last year, you met the safe harbor and there won't be any penalties for owing so much, but you didn't file at all last year?  Did they owe you?

oooo - I didn't know about that! Yes, I paid in about the same or more! and they I'd typically get a 1 or more k back. Whew!

A caveat here... you have to meet the safe harbor payments on a quarterly basis. In other words, if your tax liability was $8,000 last year, then you have to have withholding + estimated taxes of $2,000 paid in for 4/15, $4,000 paid in by 6/15, $6,000 paid in by 9/15, and $8,000 paid in by 1/15.

Estimated taxes are deemed paid when you actually pay them. Withholding, on the other hand, is deemed paid equally throughout the year. In other words, if you elect to have withholding taken from your RMD and that single yearly RMD occurs each November (which is what I do with an inherited IRA), then 1/4 of that withholding is deemed paid each quarter. If you have a $16,000 RMD, for example, you could have $8,000 withheld and that would satisfy the safe harbor rules.

[Rukh O'Rorke]

Apr 16, 2019 10:49:29 GMT -5 @rockhounder said:

If you get a call from the IRS it's always a scam. They only contact you via mail. 

That is not correct and you should be careful about authoritatively dispensing misinformation.

I had to submit a phone number and a good time to call with my tax return. A call out of the blue is likely a scam, but that doesn't mean they never use the phone.


www.irs.gov/newsroom/dont-be-fooled-phone-scams-continue-to-be-serious-threat-nationwide

[Deleted]

Apr 16, 2019 8:54:48 GMT -5 alabamagal said:

Setting up payment plan with IRS should have lower interest rates than most credit cards, and does not show up in credit reports as long as you make payments.

I agree- had to resort to this when I was married to my Ex.  He'd liquidated a $6,000 IRA and we owed a penalty on it since he was under the minimum age to avoid the penalty, and of course the $6K was also taxable income.  I had savings but the marriage was on the rocks and didn't want to use my resources to pay it off.  I guess I sort of did, anyway- I should have added that liability to the divorce settlement and am not sure why I didn't.  It was a crazy time.

But, what I wanted to mention- the following year I had Federal refund due and they grabbed it to pay the debt.  (Ex had no income and was too irresponsible to file a return anyway.  I filed as Married Filing Separately the year we divorced to protect myself.)  Not an unreasonable move by the Feds, but I just wanted to point out that if you're on a payment plan and are anticipating a fat refund, you won't get it if you have any debt outstanding.

[Rukh O'Rorke]

Apr 16, 2019 10:55:33 GMT -5 MN-Investor said:

Apr 16, 2019 10:37:28 GMT -5 Rukh O'Rorke said:

oooo - I didn't know about that! Yes, I paid in about the same or more! and they I'd typically get a 1 or more k back. Whew!

A caveat here... you have to meet the safe harbor payments on a quarterly basis. In other words, if your tax liability was $8,000 last year, then you have to have withholding + estimated taxes of $2,000 paid in for 4/15, $4,000 paid in by 6/15, $6,000 paid in by 9/15, and $8,000 paid in by 1/15.

Estimated taxes are deemed paid when you actually pay them. Withholding, on the other hand, is deemed paid equally throughout the year. In other words, if you elect to have withholding taken from your RMD and that single yearly RMD occurs each November (which is what I do with an inherited IRA), then 1/4 of that withholding is deemed paid each quarter. If you have a $16,000 RMD, for example, you could have $8,000 withheld and that would satisfy the safe harbor rules.

I had the usual paycheck withholding over the year - so I am assuming that that satisfies this? I made quite a bit more money 4th quarter than quarters 1-3, and more taxes were taken out 4th quarter as well.

[TheOtherMe]

Withholding is deemed to be paid equally throughout the year.  

The refund from 2017 will be applied to this, so that will help a lot.  

The problem with filing late is that the statute of limitations doesn't start until you file.  If you do owe, the penalties go back to the due date with extensions and they are pricey, as there is failure to file, failure to pay plus interest.  I've surprised people with that problem when they got audited.  

[shanendoah]

I also owed the IRS a lot this year. When I ran the preliminary numbers in late January, I thought it was going to be around $7700, and that we would be taking the standard deduction for the first time in 16 years, as we were about $1k under than in itemized deductions. Turns out I'd forgotten about paying $5k in points on the new mortgage, and that moved us over and dropped us down a bit.
In the end, we owed about $6150.
Now, we had the money from the sale of the house, so had the full amount, and I'd moved it over to long term savings in late January, so there wasn't a temptation to spend it.
But ours also came because I did an early disbursement of a retirement account. That had a 10% penalty (which they withheld), but I didn't think about it increasing my taxable income by $56k for the year - which bumps you up a LOT of tax brackets. So that number was a bit of a shock to me, too.

The past couple of years, we've owed, but under $1k each time, and always paid in full. We're paid in full this year. And I've finally adjusted my withholdings, now that everything with Pop Tart is settled, so I am no longer under-withholding (which I was the last couple of years). So hopefully next year, we should be right on track.

[Tiny]

My estimate for next spring is that I will owe an additional 8K....   I will have a shit ton of "income" in 2019.       I'm planning to attach a really big check/direct deposit?  to my forms when I file next year.   

[Rukh O'Rorke]

Apr 16, 2019 8:54:48 GMT -5 alabamagal said:

We had some experiences owing the IRS money and working out payment plans back when we were struggling with owning a business. There were no threatening phone calls, most documentation was via mail.

As long as you file - are you doing your 2027 filing also? - and agree to make regular payments and have the means to make payments and follow up and make the payments on time, it will be fine. Send in your filing maybe even with a form saying you cannot make payment, then wait a few weeks and call the IRS. Be prepared to be on hold for a while, but you can eventually talk to someone and set up a payment plan. Please stay in contact with them, other than long hold times we never had any problems with the people we worked with.

Setting up payment plan with IRS should have lower interest rates than most credit cards, and does not show up in credit reports as long as you make payments.

A little early for me on that one!

2017 is in the mail, picked up by uspo at noon today. Along with a check for my first payment on 2018. Going to different spot


So - 2017 going to California will take a few days in transit. Then a week or so get in their system, hopefully I am low enough on their priorities that I don't need to communicate with them until that is in their system.

[Rukh O'Rorke]

crap - just got a notice my 2018 returns were rejected.


ok - going to start seeing what is up with that.

[Rukh O'Rorke]

it's because I don't have the AGI from 2017. So now I am behind on payments and late.

Should I print out and send by mail? or file an extension until the 2017 goes through?

At any rate, my tiny payment is on the way..

[NoNamePerson]

Whew, I just came here from looneys thread. Makes me appreciate the dull boring uncomplicated life I lead.      

[Rukh O'Rorke]

Apr 16, 2019 12:36:41 GMT -5 Tiny said:

My estimate for next spring is that I will owe an additional 8K....   I will have a shit ton of "income" in 2019.       I'm planning to attach a really big check/direct deposit?  to my forms when I file next year.   

not sure why income is in quotes with a frowy face? Hope that isn't a bad situation for you?

I do keep telling myself - hey - I am making the money here! Just a short term adjustment/confusion with all the changes.

When I printed out my taxes there was a sheet that said submitted 4/15, and then rejected by irs, so hopefully they will cut me a little slack on that?

Otherwise - it is what it is, and they will do to me whatever they will do to me.

I'll pay the money and move on. Things should be a little easier organizationally now that I only have 1 job and not going to school/dissertation writing. I had to prioritize and being on top of things financially was one of the many things that fell through the cracks temporarily.


Plus side - after last year's income increase - my estimate ss payouts have all increased, even the early retire at 62 went up a couple hundred a month.

accentuate the positive!

[TheOtherMe]

Apr 16, 2019 15:30:38 GMT -5 Rukh O'Rorke said:

When I printed out my taxes there was a sheet that said submitted 4/15, and then rejected by irs, so hopefully they will cut me a little slack on that?

Otherwise - it is what it is, and they will do to me whatever they will do to me.

Since you filed on paper (your only choice without the prior year AGI) and it has the statement about the return being rejected and you mailed it the same day you found out, it will be considered timely.

[Rukh O'Rorke]

thank you!

[oped]

Daughter didn’t file last year but they still let me file electronically? She had no income last year... am I wrong about that?

[Deleted]

Apr 16, 2019 15:47:18 GMT -5 oped said:

Daughter didn’t file last year but they still let me file electronically? She had no income last year... am I wrong about that?

How did they do the verification step where you normally put in prior year's AGI?  I couldn't e-file either of my kid's returns because it was their first year filing. 

[TheOtherMe]

Apr 16, 2019 15:42:48 GMT -5 Rukh O'Rorke said:

thank you!

Since it's been 5 years since I prepared returns for others, I do remember that you have either 48 or 72 hours to correct the reject code or do the paper filing and include the reject statement.  

Paper returns do not get processed as quickly as electronic returns.  Somebody has to key in the numbers, etc.  

[oped]

Apr 16, 2019 15:49:19 GMT -5 minnesotapaintlady said:

Apr 16, 2019 15:47:18 GMT -5 oped said:

Daughter didn’t file last year but they still let me file electronically? She had no income last year... am I wrong about that?

How did they do the verification step where you normally put in prior year's AGI?  I couldn't e-file either of my kid's returns because it was their first year filing. 

I’m trying to remember. I had her double check and she said she has an email accepted by irs... 

[oped]

Turbo tax...

[oped]

Oh, she is over 16. I think that is it. Huh. Technically she’s not first time, just didn’t have any ‘real’ income last year... they took it though. 

[CCL]

Apr 16, 2019 15:40:21 GMT -5 TheOtherMe said:

Apr 16, 2019 15:30:38 GMT -5 Rukh O'Rorke said:

When I printed out my taxes there was a sheet that said submitted 4/15, and then rejected by irs, so hopefully they will cut me a little slack on that?

Otherwise - it is what it is, and they will do to me whatever they will do to me.

Since you filed on paper (your only choice without the prior year AGI) and it has the statement about the return being rejected and you mailed it the same day you found out, it will be considered timely.

OK. Now I'm confused. Did you mail 2017 and electronically file 2018 (but then it was rejected). I don't understand why you couldn't get the AGI from the 2017 return.

[TheOtherMe]

The 2017 return was mailed yesterday.  It isn't in the IRS system to verify the AGI.  

[CCL]

So IRS needs the 2017 AGI in their system to verify she entered it correctly when electronically filing 2018. That makes sense to me now. Thanks.

[weltschmerz]

"Setting up payment plan with IRS should have lower interest rates than most credit cards, and does not show up in credit reports as long as you make payments."


I just paid off mine all at once. All $2,000 of it. I hate having debt hanging over my head, just hate it.  Furthermore, if I croak, DS will have to deal with it.

[NoNamePerson]

Apr 16, 2019 22:20:11 GMT -5 weltschmerz said:

"Setting up payment plan with IRS should have lower interest rates than most credit cards, and does not show up in credit reports as long as you make payments."


I just paid off mine all at once. All $2,000 of it. I hate having debt hanging over my head, just hate it.  Furthermore, if I croak, DS will have to deal with it.

If someone has the money to pay it all off at once there is no need to set up payments or at least I wouldn't think so unless I have missed something somewhere in the thread.

[countrygirl2]

I about lost it year before when I paid in $10k and found out we owed $25k more between federal and state.  I cleaned out a lot of our ready cash reserves, scrapped everything clean.  It was my fault, I knew I had capital gains, that was what the $10k was for but didn't think about recapturing depreciation.  Hubs service had done it in years before and I had not done a return for us selling property, if I had would have taken it from the proceeds before giving to son. In fact I had not done a return in 15 years.  We are still feeling that burn.  It's very slowly getting better but will take a few more years to recover from that being on a pretty much fixed income.

I am so sorry this happened to you.  However, we have never not filed a return.  I'm assuming it was a refund or nothing owed so hopefully just a penalty and moving forward.  Just don't let it sneak up on you again. I know how devastating this can be.  I found one of hubs RMD's did not have taxes taken out and I changed that, it was his biggest one, so hope that helps us in the future.

Good luck, hope you can get it all worked out.