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You don't say whether your IRS debt is just owed taxes, or failure to file. Typically, the fine for failure is almost 100% of owed taxes PLUS interest. Somif you owe $61k in back taxes, the actual bill will be much worse. If that is what you owe in taxes, fines and interest, total,
Then thats not "that" bad with your income. Like buying an expensive car for your ex wife you never see. And the fine and interest are deductible on the tax year paid. Most important thing is to get that going and done. Definitely get an IRS centric debt service first, and get a scheduled payment set up first. Then figure savings. If you can keep that income for 12 years, you should be fine. At that level you could easily be out of debt and have $500k saved by 63. Sounds like you don't expect or need a $100k/yr retirement.
Right.
You just sort of breezed over the IRS debt details which is the actual problem LOL. "GOING TO" do a payment arrangement is a pipe dream until it's actually DONE.
You need to call an IRS debt company (with careful research because there are many questionable ones out there) get a consultation, and then let them run interference for you because you don't know what you're doing.
THAT would be the FIRST check I'd write.
It depends on how old the tax debt is and what stage you're in. Once you go to Collections (stage 3), they can put a lien/levy and seize your pay and bank account and other assets including that 401K. THEN they'll require you to ONLY bring home the bare minimum living expenses that you need according to their zip code Allowable Living Expenses. Google it. It's all explained on the IRS website. Which may not be the worst thing since you'll be paying it off quickly that way and you don't have all that much at risk it seems.
A tax assistance company will get them to freeze Collections for now while they sort out the details for/with you and come up with the best plan - one which MAY include forgiveness of interest/penalties or stopping future interest which if you do it yourself you could be making worse. They'll negotiate that with the IRS and get their agreement.
Is this NEW debt from - like the last two years - or old debt? How did you file 2015, 2016 if it's "old"? Was it a one time thing where you took a big distribution or something? Sorry if I missed that part.
It sounds like you just read a letter and made assumptions. "oh I'll make payment arrangements".
An IRS debt service company will do it all for you for a percentage of your tax liability. So...maybe a couple thousand down and a total of 10% or so later if you need them to file your unfiled returns and other stuff. If you don't own anything or do a long form because of deductions, it should be simple for you to file your own EZ form and even get off much cheaper than paying them to do it. WHICH BTW may be another red flag for you if you're in sales? If you use their car I guess you're not taking mileage or home office but all this is part of filing to your own advantage ACCURATELY and provably. Because one simple error could disallow your major deductions in some cases (like how you take mileage which requires a contemporaneous record of every trip you make every day of your life for business AND personal - assuming you put your vehicle in service correctly the first time you filed it).
Last edited by runswithscissors; 05-12-2017 at 08:01 AM..
Obviously the OP knows he made some really bad decisions but all he can do is concentrate on doing better in the future. Why Shame when you can encourage. It's never to late to start doing better.
Exactly! Hope dies when one is dead. OP you can do this! You have a team of people rooting for you.
Are you in touch with the IRS? Guessing not. They can be very reasonable, IF one is in touch. 'They will NOT be ignored." Hire one of those firms that nego it down. It'll still be much cheap than paying them off.
I also don't think you are looking for advice but encouragement. Don't listen to the chicken little, sky is falling folks.
You probably have great health insurance, check out the mental health bennies. Many people have depression, me included. Mine is very mild (dystimia sp) and I take 1/2 a pill a day.
I'd be saving for retirement before paying down debt. 8% matched and compounded. Can't beat that. And retirement accounts are safe from legal actions.
Don't worry about the taxes on retirement now. Worry about building it.
If you have cash in hand, you can negotiate an offer in compromise. You need an IRS attorney to represent you. The IRS will not do this if they think you can make payments or if they think they can get the full amount from you.
Years ago an entrepreneur friend of ours owed several hundred thousand. He turned up at the IRS hearing expecting the worst. The IRS rep did not have his paperwork straight with enough supporting docs & asked for future hearing date. The exasperated judge said to Pete, how about if you pay today & be done with this? How about 30k? Pete could not write check fast enough.
Point being you need a hunk of cash to pull off an offer in compromise. Not everyone would get such a deal as paying less than 10% owed, but 25-30% is not unusual.
Yeah many people who wait this long to rectify their situation don't really have many options. But we have a poster making $120,000 with a $600 rent, he can knock out this problem in 1/4 the time it would take most people. The good news is he finally woke up and is acting responsibly. We all wish you good luck.
You just sort of breezed over the IRS debt details which is the actual problem LOL. "GOING TO" do a payment arrangement is a pipe dream until it's actually DONE.
You need to call an IRS debt company (with careful research because there are many questionable ones out there) get a consultation, and then let them run interference for you because you don't know what you're doing.
THAT would be the FIRST check I'd write.
It depends on how old the tax debt is and what stage you're in. Once you go to Collections (stage 3), they can put a lien/levy and seize your pay and bank account and other assets including that 401K. THEN they'll require you to ONLY bring home the bare minimum living expenses that you need according to their zip code Allowable Living Expenses. Google it. It's all explained on the IRS website. Which may not be the worst thing since you'll be paying it off quickly that way and you don't have all that much at risk it seems.
A tax assistance company will get them to freeze Collections for now while they sort out the details for/with you and come up with the best plan - one which MAY include forgiveness of interest/penalties or stopping future interest which if you do it yourself you could be making worse. They'll negotiate that with the IRS and get their agreement.
Is this NEW debt from - like the last two years - or old debt? How did you file 2015, 2016 if it's "old"? Was it a one time thing where you took a big distribution or something? Sorry if I missed that part.
It sounds like you just read a letter and made assumptions. "oh I'll make payment arrangements".
An IRS debt service company will do it all for you for a percentage of your tax liability. So...maybe a couple thousand down and a total of 10% or so later if you need them to file your unfiled returns and other stuff. If you don't own anything or do a long form because of deductions, it should be simple for you to file your own EZ form and even get off much cheaper than paying them to do it. WHICH BTW may be another red flag for you if you're in sales? If you use their car I guess you're not taking mileage or home office but all this is part of filing to your own advantage ACCURATELY and provably. Because one simple error could disallow your major deductions in some cases (like how you take mileage which requires a contemporaneous record of every trip you make every day of your life for business AND personal - assuming you put your vehicle in service correctly the first time you filed it).
I just spoke to a person who used to be an IRS again and he said that they will give me about 72 months to pay off 60k or so. So for 72 months it should come up to $850 a month. Oh yeah. I am writing them a check asap and can go up to $2000 a month, if they did levy it would hurt me at all they would force me to get it paid off quicker. all good. I paused my 401k to get ready to send the IRS mostly payments.
Yeah many people who wait this long to rectify their situation don't really have many options. But we have a poster making $120,000 with a $600 rent, he can knock out this problem in 1/4 the time it would take most people. The good news is he finally woke up and is acting responsibly. We all wish you good luck.
Yes wide away i could knock this out in 2.5 years... or 3 years. I'm ready and happy now more than ever. i am no longer running from it.
With your extremely low expenses,cant you realistically rely on just your Social Security for retirement after your debts are paid off?
I hope so i made a lot of money in my years.. last year pulled in 143k.. Not rich but I maxed SS for sure.
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