#IRS #taxes #taxhelp #taxdebt #IRSdebt #taxadvice
Hey there, first of all, take a deep breath. Dealing with the IRS can be incredibly stressful, but it’s important to stay calm and approach the situation with a clear head. The good news is that there are steps you can take to address the situation and find a resolution that works for you.
Understanding the Situation 📑
It sounds like you have found yourself in a tough spot due to some confusion around your tax filing. Here are a few key points to keep in mind as you navigate this situation:
– You may have overlooked the requirement to file a 1099 for your self-employed income, which has led to the IRS assessing additional taxes.
– The IRS has sent you a letter outlining the amount owed, which is a crucial piece of information for understanding the scope of the issue.
– It’s important to take action and address the situation as soon as possible to prevent further penalties and interest from accruing.
Assessing the Debt 💰
Before you jump into finding a solution, it’s important to have a clear understanding of the debt you owe to the IRS. Take some time to gather the following information:
– Review the letter from the IRS to confirm the amount owed and any specific details about the tax assessment.
– Take stock of your current financial situation, including your income and expenses, to get a sense of how the debt fits into your overall financial picture.
– Consider reaching out to a tax professional for assistance in understanding the full scope of the issue and developing a plan to address it.
Next Steps for Resolution 📝
Now that you have a grasp of the situation, it’s time to start working towards a resolution. Here are a few steps you can take to move forward:
1. Contact the IRS: Reach out to the IRS as soon as possible to discuss the debt and explore potential options for repayment. The IRS may be willing to work with you on a payment plan or offer other solutions to address the debt.
2. Seek Professional Help: Consider enlisting the support of a tax professional, such as a tax attorney or enrolled agent, to guide you through the process and advocate on your behalf with the IRS.
3. Explore Your Options: Take the time to understand the different repayment options available to you, such as installment agreements or an offer in compromise, and determine which approach aligns best with your financial circumstances.
4. Build a Financial Plan: As you work towards resolving the tax debt, it’s crucial to create a solid financial plan that helps you manage your current expenses while making progress on the IRS debt.
Moving Forward with Confidence 🚀
Dealing with tax debt can feel overwhelming, but it’s important to approach the situation with a sense of determination and a proactive mindset. By taking the time to understand the debt, seeking out professional support, and developing a plan for resolution, you can work towards finding a manageable solution that relieves the burden of the IRS debt.
Remember, you’re not alone in facing tax challenges, and there are resources and experts available to help you navigate this process. Stay focused on finding a path forward, and with diligence and perseverance, you can address the tax debt and move forward with confidence.
Whatever you do don’t ignore it. You need to contact the IRS and see what kind of a plan you can set up. I’m sure they understand that you don’t have $13,000. Whatever you do, do not do nothing. They can help you.
Go to a tax professional (even just HR Block) and have them do an amended return. You may not owe as much as the IRS claims.
You’ll want to file an amended return. They are saying $13,000, but they don’t cut you any breaks when they calculate it, you may find that if you properly file an amended return your bill could be less.
After you fix the return you can call them and set up a payment plan. Make it a reasonable payment you can afford, you wont get many chances to adjust the payment again after you set it up.
Not exact math here but if they want 13k in taxes that means you made $60k+ for your side gig?
If you live in a decent sized city there is probably an IRS office nearby, usually in a federal building, they tend to be really happy to help you if you show up will all your documentation and you are willing to accept what you owe. A lot of times the person there will even help you check if there are anyways you can reduce the amount you owe and get a payment plan worked out for you.
I had to deal with them once and I was shocked at how easy they are to work with even to fix problems that are 100% your fault, especially given the stereotype of IRS employees, and every time someone I know has a problem that I can’t quickly help them straighten out I just send them down to the IRS office and they have all also been surprised at how easy the IRS people are to work with. I would try to get this worked out before we get too far into tax season and they get busy.
I would contact a tax accountant and resubmit 2020 tax return. A tax professional will help you work with the IRS to get a payment plan and everything up to date so this does not follow you around. You own tax, interest and penalty. Plus state taxes.
You need help with the process.
Apologize, ask them to waive the fees and interest because you didn’t know and set up a payment plan
OP whatever you do, do not go to one of those tax reduction, scam companies, figure out the legitimate debt set up a payment plan and work through it super easy
Work *WITH* them.
The IRS just wants their money. They don’t want you to go jail, because then you’re not making money for them to tax.
Work *WITH* them to set up a reasonable payment plan, and then pay it.
You can even explain that you’re a young kid, went through a death in the family, and just made a mistake.
* Be polite
The IRS is used to dealing with irate assholes. Being polite and amicable can get the auditor to waive a lot of penalties and fees.
Being cooperative, polite, and showing a readiness to pay what you owe, will go a *LONG* way to them working with you, not against you.
I’m a CPA and agree with amending the return. You can add expenses you can support to bring down the income. Your statute of limitation is coming up, so do it fast (3 years from the date you filed the 2020 return).
Regarding your penalties, ask for FIRST TIME ABATEMENT. You can ask for it over the phone. You were young so you shouldn’t have much of a filing history. Tell them you were 19 and didn’t know what a 1099 was and that your step father had passed around that time. Once penalties are abated, your interest should decrease (they will not completely remove interest). See if you’re eligible at: https://www.irs.gov/payments/penalty-relief-due-to-first-time-abate-or-other-administrative-waiver
Installment plans are an option after penalty relief. Maybe $250-500/mo but interest continues to accrue. Ask the IRS for help, they will help you.
The IRS can claim whatever they want and you’ll have a tough time fighting them yourself. Go to a professional and file an amended return.
They sent me a letter once saying I owed them about $3k for unreported income. I sent them everything I had showing it was bogus and they just sent the same exact letter back to me about a month later. I hired a CPA, paid her $300 to hash it out and the IRS ended up sending me $1500 instead.
Just talked with the IRS today. They said I owe $800 from 2020.
But 600 is from interest because I had no idea.
Good news 2020 is one of years they are offering abatement for.
Call them, get to a person. They wanted me to set up an appointment with my local IRS office, luckily the lady was amazing and helped me over the phone. She applied to the program for me. Should be 30 days. programs goes till March. So you best hurry and you may be able to get all the interest wiped away.
I’ve been there. Setup a long term payment plan with the IRS. They are not a bank and will not try to fuck you over. They realize that you can’t pay all of it immediately. All they care about is that you pay it off at some point
What you need to do is **amend** your 2020 tax return to deduct expenses from your 1099 income. The IRS will then adjust that $13K down accordingly.
May not hurt to consult a tax attorney. They can better assist and let you know your options.
Try to work out an offer in compromise. If they won’t go for that, see if they will accept a payment plan. They almost always go along with a payment plan.
Don’t get your hopes up the collection agent will waive every penalty and interest. But you are helping his collection numbers so he or she will be willing to work out a payment plan. And might waive a bit of the extras.
First, that seems like a lot to to owe based on what you’ve said for income.
Second, the IRS is incredibly flexible and will work on payment plans.
I owed about 3500 one year, and was able to put it on a payment plan for 200 a month. There may be a 10k limit to that though. My stepdad’s job didn’t take out taxes from his check when he thought they were, and owed a bit over 10k. I suggested he do what i did, but he said he couldn’t.
Edit: looked it up, you can do a payment plan up to 50k, and payments have to have it paid off in 72 months.
Set up a plan yesterday before they garnish your wages, bank accounts, or do backup withholding. IRS doesn’t need to go to court to garnish you by the way. They’ll just do it.
Do amended returns to see if your liability is actually less too.
Find a tax lawyer to help. Self employed implies lots of deductions that will lower that tax debt significantly.
My dad owed $10k due to an accountant who steered him wrong in what he could claim. He had an honest conversation with them, and they made a payment plan.
Definitely contact them and work out a payment arrangement. I would recommend getting advice from an accountant to amend your return to verify thats the correct amount owed. They will do a payment arrangement based on your income and monthly bills. Also, even if it takes you a long time to pay it off the back taxes will disappear after 10 years from the date you filed. If you do an amendment it would fall off ten years from when you file that. The IRS representative told me this directly, and my father owed for multiple years and they gradually fell off.
CPA here, I would highly recommend working with a licensed professional, as their fee most likely will be alot less than what they can save you. Surely you had expenses you can claim against the 1099 income, so file and amended return (has to be done very soon because of the 3 year deadline), claim the income and any legitimate expenses you can to reduce the self-employment income. Do not apply penalties and interest to the filing and set up a payment plan immediately for your adjusted balance due. Then when they send a notice saying you owe penalties have the licensed professional request abatement, which should most likely be approved. Keep in mind depending on the state you live in, you will owe state tax in that income as well.
This happened to me around your same age as well. I was about three weeks from getting married and got a letter that I owed back taxes from a graduate school job I had that never had taxes taken out (I trusted my boss like an idiot but I was young, like you, and it happens).
I was able to set up a payment plan with them as they just want what is due. You aren’t ruined, just learn from the mistake and inform others about it in the future. You’ve Got This!
Tax preparer here. You need to be in contact with the IRS. I would not rush to accept the 13k judgement against you. If you were door dashing or what ever for the self-employed income you certainly had expenses that could offset some of the income. I would go through the 2020 records and see what expenses you can come up with that are directly related to your self-employed income and work on amending the 2020 return to include both the income and expenses.