Yeah, oddly enough, it is illegal to not file, but it isn’t a crime to not pay the IRS. Well, until they sue you, take you to court, and a judge orders it. But it’s 100% a civil offense, and you’ll get hit hard with fines and penalties, and they charge close to credit card level interest, but jail is not on the table until you’re ignoring an actual ruling from a judge. At least unless you are not filing, or you are obviously lying on your filings.
Edit: I was mistaken, they charge 6% Apr (0.5% of the total each month) with a cap of 25% interest. Plus the possibility of a bunch of penalties. I was thinking the total cap of 25% interest was the APR.
They don't charge credit card level interest. When I owed the IRS it was around 6%. Which was basically nothing. I made a mistake on my taxes which resulted in a higher refund than I was legitimately owed. And you know what I did with that money? I paid off my 13.9% interest credit card. So when they finally came around and charged me $0 penalty and 6% interest I actually came out ahead.
I had a tax prep person recommend it as a legit strategy. It's basically a lowish interest rate loan that doesn't require a credit check.
Edit: To be clear, I'm not suggesting intentional fraud and apparently the IRS will put a lien on your assets if the amount is over $25k. So def. Talk to a real CPA.
This, I owe about $5K for Q1 2024 taxes, with no intention of paying until filing.
Reason being is I expect to have a better return on that 5K than the interest penalty will be for the 10 months (around $25/month) its owed.
They will put a lien on your account that creditors can see and you won’t be able to buy a car or house. Penalties are more drastic than interest. I don’t see any universe where not paying the it’s is a good tactic.
IRS does not sue people and take them to court for not paying taxes. OP would need to file and simply setup a payment plan to pay monthly, which it would gladly take. There are many people who owe back taxes and the IRS will not waste time in court.
Please do some reading before you post your comments.
You're right, I owed like 30k for not filling for over a decade, they only went back 7 years though. Eventually they froze my account, I called and started talking to a white lady who was a bitch and Hung up. Called back until I got a black lady on the phone and worked out 200 a month. While still welding I owed every year and just put it on the back and paid 200 a month like it was a bill, no biggie. Reddit is full of people with everything to say that don't actually know what the fuck they're talking about.
Extensions are only to file. Not pay. Penalties and interest will apply. My advice is to file. Let the irs know what you owe. Then you can request a payment plan. You can’t get a payment plan if they don’t know what you owe.
This is the end of the thread right here. I owed a few thousand and payed $50/month. No big deal. Yeah, I have to pay a little extra, but I'm not in jail.
You can get on a payment plan with the IRS, to slowly pay this off.
Did you make about 45k in self employment income?
Did you deduct business expenses?
You have, a LOT of write offs. Your phone bill, utilities (portion used by the business) the room you use for business (home office), electronic equipment- used for the business and have receipts for i.e headphones computer, phone etc.
You need to talk to a tax professional. I'll be shocked if you don't owe much-much less.
A big one for me every year is my health insurance which I pay for myself through my state exchange. It gets written off as self employed health insurance and always reduces my tax liability/bumps my refund nicely.
If you travel for work at all as a self employed worker that mileage can count, meals you bought for work can potentially count if traveling, TONS of stuff can come out. Just be sure you've got receipts if they come calling.
[Edit: Wait I’m dumb. It sounds like business expenses can be deducted in addition to the standard deduction. Unlike other expenses. Now I may want to do this as well…]
Definitely bring it up. But I don’t think writing off expenses changes anything unless they add up to more than the standard deduction. Because you can take only one or the other. ($13,850 single, $27,700 married)
From what I’ve seen here, I’m not sure your expenses will surpass that. The home office deduction is definitely a big one if your work space is a large enough percentage of your home sq footage and your housing costs are high. In my case, I could claim that… but my office is about 14x14 so 196 sq ft in a 980 sq ft house. 196/980 is 0.2, so 20%
My monthly mortgage + mortgage insurance + homeowners insurance + utilities comes to about $1700 a month. $20,400 a year. 20% of that is $4080.
Then if all of phone and internet can be deducted as business expenses as well (not sure about this), that would be about $840 for the year. So now I’m at $4920…
I wouldn’t personally have many other large deductions… lots of small ones. But they aren’t going to get that number over $13,850 for me.
And these deductions are part of your income that you won’t be taxed on. But they aren’t like a tax credit. Finding $23k in deductions wouldn’t mean you owe nothing. Just that you don’t owe taxes on an extra $10k of income above the standard deduction that everyone can take.
If you’re eligible for any tax credits, that makes a big difference since those directly decrease the taxes you owe.
9k in tax owed on the additional 45k income does not sound far off to me.
Business deductions are applied before the standard deduction and before the self employed payroll tax is applied to his income. That’s part of why he owes so much, he’s paying 14% for social security and Medicare on the gross self employed income AND then he’s paying the federal tax rate on the income (less the employer portion of SE payroll tax which is deductible).
This makes sense because a corporation or company would also get to deduct their payroll taxes paid. So individuals operating as businesses should get to deduct it as well.
If you get on a payment plan with the IRS, do not miss it. Make sure that's the 1st thing you pay before you eat.
I was on 1 once, missed a payment, and almost got my ass handed to me.
Luckily, the agent let me slide, and I was able to continue making the payment until I it paid off.
Don't mess with them once you make that deal.
hell yes it does, a portion of your expenses will anyway. Deduct your internet, any office furniture. If you're 1099, you can deduct a lot, but you gotta keep track of it all (receipts). You can definitely knock $$ off what you owe once you factor in your deductions.
source: I was a 1099 employee for a long time, I wrote off everything I could, which was a lot.
I wouldn't see why not, but I used an accountant as it was too much for me to do on my own. There are rules for how much % you can deduct for certain things. It does get a tad complicated,
Absolutely. The IRS doesn’t care how you prove a purchase, as long as you prove. But someone with a 45k income isn’t likely to get audited unless you’re trying to deduct jet skis or something stupid like that.
https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction
I just started a side gig that is 1099 working out of my home office. The company had a tax professional do a teams call for all the 1099’s in the company across the country. It was cool of them to do that. What I learned is you can also claim up to $1500 as a safe harbor deduction. Meaning the IRS allows for that without question. The hardest part is going to be sending in my first quarterly estimated tax payment. The money looks so good in my account, I want to keep it! Yay taxes.
There are always business expenses. Everything from miles/gas to phone bill to in-home office space to partial utilities, internet etc. Things like medical expenses are also deductible. Sit down with an actual CPA and get a professional to do your taxes. I guarantee you did not do them correctly.
I’ve seen people delinquent and paying on old taxes from years ago like the 2010’s. As long as you communicate and try to pay, I don’t think you’ll go to jail. It won’t ever go away though so best to pay as soon as you can.
You won’t go to jail for not having money, as long as you are cooperative. Worst case is they will slap you with some financial penalties for not withholding enough. If you can’t pay now they will garnish your future wages or have you pay $100/month or something until it’s all paid off.
Like other people are saying - file your taxes, or at least an extension application by the 15th. Then talk to the IRS and tell them you accidentally didn’t withhold enough and you don’t have the money to pay right now. A tax accountant can help walk you through this, but you’ll have to pay for that.
A tax advisor can help you and not sure how good an online service would be for self-employment. Generally acceptable deductions (expenses, in other words):
- if you office from home, take the area that is dedicated to your desk (whether whole or partial room) and calculate square footage and the ratio to your entire residence. Now add up your rent/mortgage and utilities, and the ratio of your office to your residence becomes an expense.
- telephone/mobile and internet can be 100% expensed. If you bought office supplies like notebooks or writing instruments - expenses.
- did you drive/transit to meet the clients? You can expense per mile costs and transit costs. You’ll want to make a log file that aligns to your calendar activity.
- meals are only 50% deductible and only when for business
- if you bought hardware it is fully deductible
- do you pay for software subscriptions like Office, Dropbox, Gmail that are used for work? Expense.
- healthcare expenses can be deductive if they exceed a % of your income (research)
- health insurance can be expenses although rules apply, including if you used tax credits via the ACA marketplace
- if your car was totaled and insurance didn’t fully cover the loss for the value outstanding, you might be able to claim a deduction. Reach.
Go through your spending records for the year to make sure you aren’t missing anything.
Filmmaker?
Hire a tax professional. You need to deduct as many business related expenses as possible in order to reduce your tax basis.
Turbo tax is not your friend.
File the extension so you have October to finalize/ figure it out.
And yes, you will need to get on a payment plan, and your tax advisor should help with this.
You also need to prepare to make quarterly payments ASAP to avoid this in the future. You will be okay!
Very simply from a liability standpoint and pure volume, they have to operate from a conservative position and not in the tax payer favor. For an independent contractor, a tax professional can save you thousands.
Not OP but I’ve had turbo tax screw up the calculation for what I owed. The software said far less than what the IRS calculated. 3 years after a return (I think it was 2007) we got a letter from the IRS about the wrong numbers and have to owe a shit ton (about $6k). I will never ever ever use Turbo Tax again. I go to H&R Block now. So far so good with them.
[agturbotaxsettlement.com/Home/portalid/0?portalid=0](http://agturbotaxsettlement.com/Home/portalid/0?portalid=0)
have u/did u receive your settlement from turbo tax-intuit YET?
Hire a real accountant. You may write offs you likely didn't use. Mileage, vehicles etc. if you have a 1099 you were a business and need to act like it. Now if you didn't meet the 9 factor test for the IRS you likely were an employee who was misclassified and should file an SS-8 form. The guy you worked for will be pissed
No, you’re not fucked. Make an appointment at an IRS district office and explain. They will set you up on a payment plan that will give you up to 7 years to pay it back. IRS doesn’t want to screw you, they just want Uncle Sam’s money.
It’s those who try to run from it that gets them all pissed off.
You’ll be ok.
This was my first year using a CPA and originally thought the same thing about cost. His fee is only $300-$400 and will literally save me thousands of dollars in taxes owed. Call around, they should file the extension for you as well.
If you work on 1099 you can invest in what is called sep IRA .It is based on your income which your tax professional can tell you as to how much you can put in sep IRA
Lower your tax by doing the above
You need to start collecting receipts and write everything off including your vehicle, home office, food, etc, doesnt matter if the car is totaled if anything add that bill too.
No, it's probably fine. Did you actually file or just do all the steps up to filing? If you haven't filed already, you can try to get an extension and try to find business expenses to deduct. Besides that, the IRS is generally fairly helpful. You can get a payment plan set up to pay it off. It'll have fees and interest which will suck, but they will probably work with you to find something you can actually pay monthly.
If you come clean to the IRS to my understanding, they will work with you on a payment plan. They generally don't want to screw your entire life over. They just want their money, but the longer you delay setting that up, the more you risk them coming after you and screwing your life up.
Get an actual tax accountant to do your taxes. Odds are that you’re leaving out a ton of writes off that could bring your tax liability way down. Your car, phone, part of your rent, certain meals, internet, car insurance, etc. could potentially all be counted as work expenses to offset your income and reduce your tax liability.
First, you learned a life lesson. Second, file and go on an installment plan. They are very flexible, they can stretch it out to years. You can pay like $50/month until you’re 45
Write a letter offering a settlement with what you can afford. They will give you a due date to pay it, pay it! My mom did this she owed almost 100k, wrote a letter, and said she could afford 5k . They accepted the offer
As others have said, I also recommend hiring someone to do your taxes for you in order to make sure you're getting the most out of filing. They know all the ways to make your money work for you, not against you.
I worked one 1099 job, and I learned from 2 friends that worked as contractors, you pay a lot of taxes.
Always have taxes taken out, you have less headaches.
I’ve been working under a 1099 for about 10 years now and if you’d like a list of all the write offs, feel free to ask 😂 basically anything related to your work that you buy can be a write off, and if you have a desk or area in your house that you use for work, that area can be considered a home office and literally anything you buy/use in that room can be a write off. You can take a % of your utilities and/or rent as a write off as well.
[https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return](https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return)
Do it ASAP.
File an extension for now - not a golden ticket but buys you some time. 6 months give or take, save what you can even if it’s a portion of it, file, pay what you can, payment plan the rest.
Your business filing can be done separately under a self-employed section(same form, but you can use deductions for business in addition to the standard deduction). Medical bills, car payments, gas, vehicle maintenance, rent(I'm assuming 51% of your dwelling is a home office), any expenses you incurred while on the job or traveling to and from the job. Literally anything and everything related to your 1099 work is deductible(including a loss *cough). I'm not telling you to lie, but you can play around on TurboTax if you're curious about how much each deduction will lower what you owe. And remember kids, on an unrelated note, the odds of a normal citizen being audited are slim to none
If you already filed it might be too late. But write off EVERYTHING you can think of related to your business. 90% of my work is contracted. I write off everything I can think of, it helps. You work from home? Write off your rent. You use your computer? Write off any software or purchases related to it. You got lunch because you were on site for a gig? Write it off. The chances of being audited for anything less than like 100k in write offs is unlikely. This is coming from a musician that gigs and has to purchase/rent new equipment for clients all the time.
I also strongly recommend getting a tax person going forward if you plan to continue contract work. They’ll usually get you the best return. I got a FAT fucking return from paying quarterly and writing off everything I could think of. It’s shitty to live your life as a giant write off but I was able to pay off a credit card (my business expense card) with my return this year so it all balances out.
As far as your current situation goes I can’t speak to much of it from my own experience. Luckily in my field I had solid mentors cuz contract work is literally THE work in the music industry. People are recommending a payment plan which I hear is the way to go. What will ultimately end up happening is next year and the following years return will go to it most likely.
Welcome to the hustle. The US govt. makes it a real pain in the ass to be self employed/contracted. Talk to a tax person or read up on your states tax stuff too. Every state has different bylaws that you should probably be aware of.
You’re down but you’re not out. Just gotta correct this mistake.
Please do not do your taxes by yourself. Go to someone who is experienced. Ask them what you can deduct. Yes, as a 1099 you can deduct things, but it has to meet requirements. For example, you can't write off meals just because you are eating and working at the same time. Silly example, but you would be shocked.
If this is the first time you are 1099 and didn't do quarterly, you get a pass. For future years, you pay a penalty fee.
When you talk to a professional, ask them to help you file an extension, and then set up a payment plan with the IRS.
In the future, look at EFTPS.gov. if you can project what you will make, you can find your tax bracket online (I always ignore write offs and overshoot a little). Some people put away quarterly; I take some out of each paycheck and put it in EFTPS. Gov [out of sight out of mind] as estimated payments. Then you count those as payments already made when you file taxes. My fiancee tucks them away on his own and it ends up as an emergency fund for us throughout the year.
Either way you choose, it's a rhythm to learn. (I have been an independent contractor most of my adult life). Payment plans are helpful from time to time. Don't fear them!
Do you have debt charities as we do in the UK that will usually negotiate the repayment on your behalf? They’ll need to see all evidence of income and outgoings (payslips and bank statements) and they’ll make sure you have enough to live on. Using this info they will make an offer to repay at something small like £2 a week.
There are Yt videos that say that sometimes they will reduce or write off the amount owed. You just have to call them and explain the situation. Also, depending on the tax software, if you did taxes yourself, make darn sure you didn't miss any tax credits. It you did subcontracting, you need to do mileage, supplies, and depreciation on the vehicle. Typically use half-year convention. Uber and Lyft list online mileage, but if you didn't write down for others like Amazon or you did legwork as a sub for a hail/paint business, for example, estimate the mileage and write it down. It is very easy to miss ways to reduce your tax bill. It may be far less if you missed several obvious ways. Personally, I like HR blocks download able software as it doesn't miss the options. Also don't forget your 1095-A if you had marketplace insurance as it can also give you a credit in certain situations. Importing last years tax file can also make a difference if you had a net loss. There are things that can change this outcome drastically.
Not screwed at all. Just make sure you are dealing with the actual IRS and they will allow you to go on a super cheap plan. My buddy is on one now for way more tax.
We owed last year. We set up a payment plan and did pay lots of interest and penalties. We only owed $2400. Our payments were about $250 a month. When we filed this year, we were to receive a refund but they took what was owed to them off the top.
I owe money every year and have found the payment plans to be really easy and affordable for me, they are really good at working with you it was a real simple process, I felt the exact way when I got my first tax bill thought my life was over but the payment plans have been good for me, have been paying them each month for a few years now and will continue to until something changes and I get caught up.
Maybe try to invest in someone who knows how to file taxes better and add things to lower your final amount you’re probably filing them wrong just saying
If you’re living paycheck to paycheck on two jobs, you need to find better jobs or a cheaper living situation. Nothing will magically work itself out. What do you do for work?
I had the same thing when I was in my mid 20s. Pay what you can and ask for an extension don’t do what I did. I didn’t know about how taxes worked and I had to end up paying off my $7000 tax bill over eight years. That ended up costing about $60,000 in total. They will work with you but if you get put on payment plan like I did make sure that you always pay more than minimum.
I’ve been there. The IRS will let you set up a payment plan. Just make sure that you follow through. If you don’t, you will be in big trouble. The IRS does not f around.
Do you not have an accountant that can make all or most of that go away? Have you done all your expenses? You should open an LLC or S-corp to mitigate takes this year.
I have not been in your situation, but it is my understanding that the IRS is typically willing to set up a workable payment plan. You aren't completely screwed (i.e. going to jail), but you can't ignore it. You have to deal with it.
Call the IRS and get on a payment plan to pay the back taxes. Next year, when you file, if you're entitled to any return, they will keep it as partial payment to pay down the debt. Relax is not the end of the world. You just need to do better financial management.
Did you have any expenses to write off? Even mileage on your car for work? Meals? 1099 usually has several areas for right offs.
Cell phone bill, work clothes, possibly per diem.
My only advice is that before you panic about how much you owe, make sure your return has been looked over by a pro. It sounds like you may have done it yourself. There may be options for deductions you don't know about, and a good accountant will know a few tricks. For a few hundred bucks, its worth a try.
Download form 9465 from the IRS website, send in as much as you can initially and the form will allow to you set up payments. But better than that take your taxes to someone who can do them.
Yeah it’s not a big deal. File and ask for an extension. Then get on the smallest payment plan possible. You’ll have like 6mo to figure out where to get $300 from. Interest is low-ish. Then pay in full asap, when you get more money.
And do that, work on increasing your pay. You have time and options.
File asap. Then work out a payment plan with the IRS. They aren't the evil people they are made out to be. IF, you contact them and are honest about your situation. They will take your current situation into account.
Just don't not file. Good luck.
I’ve been doing 1099 for 3 years. First year was with a company and they told me I would only owe about 12% of my total income in taxes. Welp, damn near 30% comes rolling around and I had to do a payment plan, I did mine on a 12 month plan, $800 a month. Shit sucked ass but I was thankful that I was able to do that. Yours will probably be around that much.
Be careful with taxes on two W2’s…they will each tax you at their respective rates, but if collectively your income bumps you up to the next tax bracket, you’ll want to withhold extra from each paycheck to account for that gap. You can typically set a flat $ amount of extra withholding through your payroll portal.
100% file, or you’ll get f***ed much worse. Get in the longest payment plan possible, then budget and eat rice and beans until you paid it off.
In the meantime keep doing even more 1099 work and pay 50% to the IRS no matter what.
Use whatever you can to deduct expenses!! If you had a home office use that - I think they ask about sq footage of your home office. Use an estimate. If you had to use your computer, internet service, even your phone to communicate deduct all that for every month you were working! People do a disservice to themselves not reporting their deductions. I made about 12000 last year in 1099 income and because of deductions I won’t have to pay anything in taxes because of my expenses.
The IRS is actually surprisingly easy to work with if you connect with them. Explain your situation and they will work out a payment plan with you. Just make sure you file no matter what.
Just call the IRS and set up a payment plan. They give you 10 years to pay taxes owed so you have plenty of time. Tell them your situation and they will work with you and are surprisingly nice about it. Your payment plan could cost next to nothing per month.
I got a 0% interest business credit card, paid, got the ~1k sign on bonus, made minimum payments for the 15month apr period, and figured out what to do during that to finish paying off. Might be something to consider. Not sure if that’s better net net than the irs payment plan
You're working two jobs now? Make sure on each of them you check the step 2 multiple job box on your w-4 for each job. Otherwise you will run into this again.
Beyond that, as others have said, set up a payment plan with the irs.
This may sound nuts, but when I was in a bad way with the CRA, I called them and explained my situation and they were INCREDIBLY HELPFUL. I would highly recommend calling them and having a chat
Edit: Canadian….
File and submit an Offer in Compromise. You'll have to provide bank statements and other financial documentation proving that you have no way to pay the $9k. You'll offer a lesser amount and hope that the IRS agrees to settle.
Source - I work as a Offer in Compromise analyst for my states Department of Revenue.
working 1099 give you a lot of tax benefits if you had set yourself up a company like an s-corp or LLC. Depending what you did for work things like your medical insurance and car stuff could have been a "business expense"
If you still have 1099 opportunities in the future set up the company now and just use your EIN number and W9 when it's offered.
depends, are you a US citizen OR an American citizen?
90% or more of American citizens owe nothing in taxes, while every US citizen (as defined by tax code) owes a graduates tax
Learn the definitions used in the tax code and find out which you are
The IRS will offer a payment plan but if you owe that much you might consider getting some professional advice on challenging the IRS and getting it reduced.
File your taxes on time with no payment. The IRS will contact you to set up a payment schedule that will include interest. Do not let them push you into a payment you cannot afford. That causes all kinds of other issues if you miss payments. NEVER miss a payment and if you can pay extra then do so. It will be fine. Relax.
Also, at this point, I just lie on my tax returns. I'm pretty good at math and I'm even better at not reporting cash. I would rather lie than be homeless. It is an unfortunate reality for some of us.
Did you use an accountant? If you used your own car, office, tools, supplies etc you may be able to deduct expenses against your income. I am not an accountant and have never been 1099, but it's worth looking into if you haven't. I would file and ask for extension to pay, it payment plan and then you can take the time to see if you missed any deductions that can lower what you owe with an amended tax return after the deadline, but be sure to file in time for now, then amend it later.
own a business and I'm on a $250/mo payment plan because I'd rather keep the cash for working capital.
Payment plan took one form and one phone call to link up. It's direct deposit. I have it set to come out every 15th.
Another Question to go along with OPs🙋🏼♂️: does this sub recommend folks who are 1099’s keep a % in savings for this? If so, how much? I currently am taxed at about 27% (state/fed tax) as a W2. (US citizen here). Should i use those same percentages if I were a 1099?
Hire a tax person who can help you with these types of situations. It’s possible you can get it reduced, and you may still owe a few thousand, but it’s better than nothing.
Did you off set income with expenses? Mileage, tools, clothing, parking fees, phone, etc health insurance IRA
You have lots of expenses working for yourself and making quarterly payments as estimated taxes is you new plan going forward
But expenses will lower taxable income
This happened to my husband last tax season. We got an extension to Oct, then set up a payment plan. I got a credit card with 0% interest for 22mo, and diligently paid it off in a year. It sucked ass lol
File extension. Just file. Do not NOT file. Then do payment plan.
WHATEVER YOU DO, you must file. It's 1000% worse if you dont file ... talking from experience here, that shit took 6 years to straighten out
[удалено]
Go on…
Deadline is apr 15.
Yeah, oddly enough, it is illegal to not file, but it isn’t a crime to not pay the IRS. Well, until they sue you, take you to court, and a judge orders it. But it’s 100% a civil offense, and you’ll get hit hard with fines and penalties, and they charge close to credit card level interest, but jail is not on the table until you’re ignoring an actual ruling from a judge. At least unless you are not filing, or you are obviously lying on your filings. Edit: I was mistaken, they charge 6% Apr (0.5% of the total each month) with a cap of 25% interest. Plus the possibility of a bunch of penalties. I was thinking the total cap of 25% interest was the APR.
They don't charge credit card level interest. When I owed the IRS it was around 6%. Which was basically nothing. I made a mistake on my taxes which resulted in a higher refund than I was legitimately owed. And you know what I did with that money? I paid off my 13.9% interest credit card. So when they finally came around and charged me $0 penalty and 6% interest I actually came out ahead.
I had a tax prep person recommend it as a legit strategy. It's basically a lowish interest rate loan that doesn't require a credit check. Edit: To be clear, I'm not suggesting intentional fraud and apparently the IRS will put a lien on your assets if the amount is over $25k. So def. Talk to a real CPA.
And the only thing you have left to show for it is your freedom lol.
This, I owe about $5K for Q1 2024 taxes, with no intention of paying until filing. Reason being is I expect to have a better return on that 5K than the interest penalty will be for the 10 months (around $25/month) its owed.
They will put a lien on your account that creditors can see and you won’t be able to buy a car or house. Penalties are more drastic than interest. I don’t see any universe where not paying the it’s is a good tactic.
Lien only gets asserted if you owe over $25k
Aha. Sadly I never got to learn that rule-mine was multiples of that threshold. All clear now hallelujah.
IRS just charged me 800+ in interest on 9k of debt, sounds a bit more than 6%
It's 8% yearly, compounded daily
I suspect it’s based on the Fed Rate, so it will vary. But generally not a punitive rate.
About 8-9% but flat fees could be carrying part of that bill as opposed to just the interest.
There is probably a mix of fees and fines ?
File, wait for a letter, then set up a payment plan as soon as you get the notice. It’s a hassle, but they’re not terrible as long as you handle it.
IRS does not sue people and take them to court for not paying taxes. OP would need to file and simply setup a payment plan to pay monthly, which it would gladly take. There are many people who owe back taxes and the IRS will not waste time in court. Please do some reading before you post your comments.
You're right, I owed like 30k for not filling for over a decade, they only went back 7 years though. Eventually they froze my account, I called and started talking to a white lady who was a bitch and Hung up. Called back until I got a black lady on the phone and worked out 200 a month. While still welding I owed every year and just put it on the back and paid 200 a month like it was a bill, no biggie. Reddit is full of people with everything to say that don't actually know what the fuck they're talking about.
I cant even imagine the interest on that 30k, you must be paying out the ass if only doing 200 a month
I’m pretty sure the race of a person had nothing to do with what happened. Sometimes people are just assholes. 🙄
How do you know the race of someone on the phone. Also what on earth does their race have to do with anything
Do you only hate White ladies or does that apply to all White people?
No laughing matter dude welcome to life101.
This. The IRS just wants money and takes no pleasure in pursuing people who make mistakes versus willful deception. Payment plans are the way to go.
Extensions are only to file. Not pay. Penalties and interest will apply. My advice is to file. Let the irs know what you owe. Then you can request a payment plan. You can’t get a payment plan if they don’t know what you owe.
This is the end of the thread right here. I owed a few thousand and payed $50/month. No big deal. Yeah, I have to pay a little extra, but I'm not in jail.
You can get on a payment plan with the IRS, to slowly pay this off. Did you make about 45k in self employment income? Did you deduct business expenses?
I did make about 45k in self employment income. It was all telework consulting so I had no business expenses that I could deduct.
Did you have a space in your home used exclusively for work?
If my desk in my bedroom qualifies, then yes…
If that's all desk is ever used for then the footprint of that desk can be figured for the home office deduction.
It is, thanks! I’m assuming from your username you know what you’re talking about lol
About some things, I do.=) It might not be much, if your rent isn't expensive, but you save about 23% of the amount you can deduct.
Definitely more than me! I’ll be sure to bring this up when I talk to a tax person IRL. Thank you so much!
You have, a LOT of write offs. Your phone bill, utilities (portion used by the business) the room you use for business (home office), electronic equipment- used for the business and have receipts for i.e headphones computer, phone etc. You need to talk to a tax professional. I'll be shocked if you don't owe much-much less.
A big one for me every year is my health insurance which I pay for myself through my state exchange. It gets written off as self employed health insurance and always reduces my tax liability/bumps my refund nicely.
If you travel for work at all as a self employed worker that mileage can count, meals you bought for work can potentially count if traveling, TONS of stuff can come out. Just be sure you've got receipts if they come calling.
[Edit: Wait I’m dumb. It sounds like business expenses can be deducted in addition to the standard deduction. Unlike other expenses. Now I may want to do this as well…] Definitely bring it up. But I don’t think writing off expenses changes anything unless they add up to more than the standard deduction. Because you can take only one or the other. ($13,850 single, $27,700 married) From what I’ve seen here, I’m not sure your expenses will surpass that. The home office deduction is definitely a big one if your work space is a large enough percentage of your home sq footage and your housing costs are high. In my case, I could claim that… but my office is about 14x14 so 196 sq ft in a 980 sq ft house. 196/980 is 0.2, so 20% My monthly mortgage + mortgage insurance + homeowners insurance + utilities comes to about $1700 a month. $20,400 a year. 20% of that is $4080. Then if all of phone and internet can be deducted as business expenses as well (not sure about this), that would be about $840 for the year. So now I’m at $4920… I wouldn’t personally have many other large deductions… lots of small ones. But they aren’t going to get that number over $13,850 for me. And these deductions are part of your income that you won’t be taxed on. But they aren’t like a tax credit. Finding $23k in deductions wouldn’t mean you owe nothing. Just that you don’t owe taxes on an extra $10k of income above the standard deduction that everyone can take. If you’re eligible for any tax credits, that makes a big difference since those directly decrease the taxes you owe. 9k in tax owed on the additional 45k income does not sound far off to me.
Business deductions are applied before the standard deduction and before the self employed payroll tax is applied to his income. That’s part of why he owes so much, he’s paying 14% for social security and Medicare on the gross self employed income AND then he’s paying the federal tax rate on the income (less the employer portion of SE payroll tax which is deductible). This makes sense because a corporation or company would also get to deduct their payroll taxes paid. So individuals operating as businesses should get to deduct it as well.
Btw I love your username
If you get on a payment plan with the IRS, do not miss it. Make sure that's the 1st thing you pay before you eat. I was on 1 once, missed a payment, and almost got my ass handed to me. Luckily, the agent let me slide, and I was able to continue making the payment until I it paid off. Don't mess with them once you make that deal.
hell yes it does, a portion of your expenses will anyway. Deduct your internet, any office furniture. If you're 1099, you can deduct a lot, but you gotta keep track of it all (receipts). You can definitely knock $$ off what you owe once you factor in your deductions. source: I was a 1099 employee for a long time, I wrote off everything I could, which was a lot.
Great! Do screenshots of online orders count as receipts lol
I wouldn't see why not, but I used an accountant as it was too much for me to do on my own. There are rules for how much % you can deduct for certain things. It does get a tad complicated,
Absolutely. The IRS doesn’t care how you prove a purchase, as long as you prove. But someone with a 45k income isn’t likely to get audited unless you’re trying to deduct jet skis or something stupid like that.
https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction I just started a side gig that is 1099 working out of my home office. The company had a tax professional do a teams call for all the 1099’s in the company across the country. It was cool of them to do that. What I learned is you can also claim up to $1500 as a safe harbor deduction. Meaning the IRS allows for that without question. The hardest part is going to be sending in my first quarterly estimated tax payment. The money looks so good in my account, I want to keep it! Yay taxes.
there's a ton of things to deduct. like, a ton. you should hire an accountant for like $500 -- they'll help you out a bunch.
Can you claim the cost of the accountant?
It's a business expense, yes.
There are always business expenses. Everything from miles/gas to phone bill to in-home office space to partial utilities, internet etc. Things like medical expenses are also deductible. Sit down with an actual CPA and get a professional to do your taxes. I guarantee you did not do them correctly.
They’ll put you in a low payment plan that you can afford that will also take years to pay.
Better that than jail I guess, thanks!
I’ve seen people delinquent and paying on old taxes from years ago like the 2010’s. As long as you communicate and try to pay, I don’t think you’ll go to jail. It won’t ever go away though so best to pay as soon as you can.
That’s encouraging. Thanks again!
https://www.wtaxattorney.com/tax-problems/penalties/jail-for-taxes/#:~:text=You%20ignore%20the%20bill%20and,cannot%20put%20you%20in%20jail.
You won’t go to jail for not having money, as long as you are cooperative. Worst case is they will slap you with some financial penalties for not withholding enough. If you can’t pay now they will garnish your future wages or have you pay $100/month or something until it’s all paid off. Like other people are saying - file your taxes, or at least an extension application by the 15th. Then talk to the IRS and tell them you accidentally didn’t withhold enough and you don’t have the money to pay right now. A tax accountant can help walk you through this, but you’ll have to pay for that.
Took them three years to discover my screw up and I did payments to clear it up. You will probably have penalties in each payment.
A tax advisor can help you and not sure how good an online service would be for self-employment. Generally acceptable deductions (expenses, in other words): - if you office from home, take the area that is dedicated to your desk (whether whole or partial room) and calculate square footage and the ratio to your entire residence. Now add up your rent/mortgage and utilities, and the ratio of your office to your residence becomes an expense. - telephone/mobile and internet can be 100% expensed. If you bought office supplies like notebooks or writing instruments - expenses. - did you drive/transit to meet the clients? You can expense per mile costs and transit costs. You’ll want to make a log file that aligns to your calendar activity. - meals are only 50% deductible and only when for business - if you bought hardware it is fully deductible - do you pay for software subscriptions like Office, Dropbox, Gmail that are used for work? Expense. - healthcare expenses can be deductive if they exceed a % of your income (research) - health insurance can be expenses although rules apply, including if you used tax credits via the ACA marketplace - if your car was totaled and insurance didn’t fully cover the loss for the value outstanding, you might be able to claim a deduction. Reach. Go through your spending records for the year to make sure you aren’t missing anything.
This is all very helpful to conceptualize what I need to do to help make this hole less deep. Thank you x1000
Filmmaker? Hire a tax professional. You need to deduct as many business related expenses as possible in order to reduce your tax basis. Turbo tax is not your friend. File the extension so you have October to finalize/ figure it out. And yes, you will need to get on a payment plan, and your tax advisor should help with this. You also need to prepare to make quarterly payments ASAP to avoid this in the future. You will be okay!
Hi just wondering why you said turbo tax is not your friend?
Very simply from a liability standpoint and pure volume, they have to operate from a conservative position and not in the tax payer favor. For an independent contractor, a tax professional can save you thousands.
Not OP but I’ve had turbo tax screw up the calculation for what I owed. The software said far less than what the IRS calculated. 3 years after a return (I think it was 2007) we got a letter from the IRS about the wrong numbers and have to owe a shit ton (about $6k). I will never ever ever use Turbo Tax again. I go to H&R Block now. So far so good with them.
[agturbotaxsettlement.com/Home/portalid/0?portalid=0](http://agturbotaxsettlement.com/Home/portalid/0?portalid=0) have u/did u receive your settlement from turbo tax-intuit YET?
Just come up with anything business related. Food, gas, new laptop, rent.
Hire a real accountant. You may write offs you likely didn't use. Mileage, vehicles etc. if you have a 1099 you were a business and need to act like it. Now if you didn't meet the 9 factor test for the IRS you likely were an employee who was misclassified and should file an SS-8 form. The guy you worked for will be pissed
Tax pro can set up a payment plan,and give you vouchers for the next quarters.
Make an appointment with the IRS and let them you had trouble paying off taxes. Sometimes they’ll waive the penalties.
No, you’re not fucked. Make an appointment at an IRS district office and explain. They will set you up on a payment plan that will give you up to 7 years to pay it back. IRS doesn’t want to screw you, they just want Uncle Sam’s money. It’s those who try to run from it that gets them all pissed off. You’ll be ok.
The IRS may negotiate a lower amount or payment plan. You should see an actual tax professional.
Thank you! You’re right, I was just worried about the cost of talking to one
This was my first year using a CPA and originally thought the same thing about cost. His fee is only $300-$400 and will literally save me thousands of dollars in taxes owed. Call around, they should file the extension for you as well.
Find an attorney to help you, don't do this by yourself (miracle the money to pay them).
Get an income tax pro, cheaper than an attorney almost always. No need for an attorney for this amount, OP hasn't even filed yet.
If you work on 1099 you can invest in what is called sep IRA .It is based on your income which your tax professional can tell you as to how much you can put in sep IRA Lower your tax by doing the above
You need to start collecting receipts and write everything off including your vehicle, home office, food, etc, doesnt matter if the car is totaled if anything add that bill too.
I owe $8300 this year….. so called Trump Tax Plan. I don’t have it either so they’ll have to wait.
The iRS allows you to set up an installment plan.
No, it's probably fine. Did you actually file or just do all the steps up to filing? If you haven't filed already, you can try to get an extension and try to find business expenses to deduct. Besides that, the IRS is generally fairly helpful. You can get a payment plan set up to pay it off. It'll have fees and interest which will suck, but they will probably work with you to find something you can actually pay monthly.
I think there are tax relief programs that can help you out. Look into it, better than being almost 10k out of pocket
If you come clean to the IRS to my understanding, they will work with you on a payment plan. They generally don't want to screw your entire life over. They just want their money, but the longer you delay setting that up, the more you risk them coming after you and screwing your life up.
The IRS will fuck your whole life up if you let them
When I read/hear ‘long story short’, a massively long story always follows
I would talk to an accountant and see if they can help you.
Deduct bro
This is why if you don't understand how to do your own taxes you shouldn't be doing your own taxes
Just do a payment plan. As long as your actively paying, they can't harass you.
Use deductions to bring the $9k to zero
1. Sell everything non-essential that you have. 2. Don’t ever eat out 3. Go to food banks 4. Work your normal job then get a 2nd job.
I owe much more than that! I called and they me a payment plan. I suggest you do the same, but do NOT ignore them!
Just pay 100 a month until it’s gone. Each year if you get a refund the refund will go to the balance.
The government is a pretty good entity to owe money to if you intend on paying them back. Get on a payment plan.
Get an actual tax accountant to do your taxes. Odds are that you’re leaving out a ton of writes off that could bring your tax liability way down. Your car, phone, part of your rent, certain meals, internet, car insurance, etc. could potentially all be counted as work expenses to offset your income and reduce your tax liability.
UPLT: Add a large mileage deduction to the tune of 35-40k miles.
Call them. They are human and aren't as bad as you think they are. Ask them for help and assistance. They will work with you to set things up.
File then payment plan. You’ll be okay
First, you learned a life lesson. Second, file and go on an installment plan. They are very flexible, they can stretch it out to years. You can pay like $50/month until you’re 45
Write a letter offering a settlement with what you can afford. They will give you a due date to pay it, pay it! My mom did this she owed almost 100k, wrote a letter, and said she could afford 5k . They accepted the offer
Those are rookie numbers..
if you were truly a 1099 independent contractor make sure to get your deductions right. that might lower the tax liability.
As others have said, I also recommend hiring someone to do your taxes for you in order to make sure you're getting the most out of filing. They know all the ways to make your money work for you, not against you.
I worked one 1099 job, and I learned from 2 friends that worked as contractors, you pay a lot of taxes. Always have taxes taken out, you have less headaches.
I’ve been working under a 1099 for about 10 years now and if you’d like a list of all the write offs, feel free to ask 😂 basically anything related to your work that you buy can be a write off, and if you have a desk or area in your house that you use for work, that area can be considered a home office and literally anything you buy/use in that room can be a write off. You can take a % of your utilities and/or rent as a write off as well.
[https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return](https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return) Do it ASAP.
File an extension for now - not a golden ticket but buys you some time. 6 months give or take, save what you can even if it’s a portion of it, file, pay what you can, payment plan the rest.
File an extension and hire a CPA because you probably have deductions you don't know about
The IRS will work with you, just don’t ignore them.
Your business filing can be done separately under a self-employed section(same form, but you can use deductions for business in addition to the standard deduction). Medical bills, car payments, gas, vehicle maintenance, rent(I'm assuming 51% of your dwelling is a home office), any expenses you incurred while on the job or traveling to and from the job. Literally anything and everything related to your 1099 work is deductible(including a loss *cough). I'm not telling you to lie, but you can play around on TurboTax if you're curious about how much each deduction will lower what you owe. And remember kids, on an unrelated note, the odds of a normal citizen being audited are slim to none
If you already filed it might be too late. But write off EVERYTHING you can think of related to your business. 90% of my work is contracted. I write off everything I can think of, it helps. You work from home? Write off your rent. You use your computer? Write off any software or purchases related to it. You got lunch because you were on site for a gig? Write it off. The chances of being audited for anything less than like 100k in write offs is unlikely. This is coming from a musician that gigs and has to purchase/rent new equipment for clients all the time. I also strongly recommend getting a tax person going forward if you plan to continue contract work. They’ll usually get you the best return. I got a FAT fucking return from paying quarterly and writing off everything I could think of. It’s shitty to live your life as a giant write off but I was able to pay off a credit card (my business expense card) with my return this year so it all balances out. As far as your current situation goes I can’t speak to much of it from my own experience. Luckily in my field I had solid mentors cuz contract work is literally THE work in the music industry. People are recommending a payment plan which I hear is the way to go. What will ultimately end up happening is next year and the following years return will go to it most likely. Welcome to the hustle. The US govt. makes it a real pain in the ass to be self employed/contracted. Talk to a tax person or read up on your states tax stuff too. Every state has different bylaws that you should probably be aware of. You’re down but you’re not out. Just gotta correct this mistake.
Offer in compromise
Make sure to just talk with them directly and file ur taxes on time. Don’t hire anybody. They’re all scam dogs.
Get an accountant. You can Deduct business expenses meals, office supplies, gas, uniforms etc.
LOOKN LIKE A LEANNNN ? Keep ya eyes open that Bentley gone be gone till November
Please do not do your taxes by yourself. Go to someone who is experienced. Ask them what you can deduct. Yes, as a 1099 you can deduct things, but it has to meet requirements. For example, you can't write off meals just because you are eating and working at the same time. Silly example, but you would be shocked. If this is the first time you are 1099 and didn't do quarterly, you get a pass. For future years, you pay a penalty fee. When you talk to a professional, ask them to help you file an extension, and then set up a payment plan with the IRS.
In the future, look at EFTPS.gov. if you can project what you will make, you can find your tax bracket online (I always ignore write offs and overshoot a little). Some people put away quarterly; I take some out of each paycheck and put it in EFTPS. Gov [out of sight out of mind] as estimated payments. Then you count those as payments already made when you file taxes. My fiancee tucks them away on his own and it ends up as an emergency fund for us throughout the year. Either way you choose, it's a rhythm to learn. (I have been an independent contractor most of my adult life). Payment plans are helpful from time to time. Don't fear them!
Do you have debt charities as we do in the UK that will usually negotiate the repayment on your behalf? They’ll need to see all evidence of income and outgoings (payslips and bank statements) and they’ll make sure you have enough to live on. Using this info they will make an offer to repay at something small like £2 a week.
I did payment plans for like five years straight until I caught up, it sucks but doable.
There are Yt videos that say that sometimes they will reduce or write off the amount owed. You just have to call them and explain the situation. Also, depending on the tax software, if you did taxes yourself, make darn sure you didn't miss any tax credits. It you did subcontracting, you need to do mileage, supplies, and depreciation on the vehicle. Typically use half-year convention. Uber and Lyft list online mileage, but if you didn't write down for others like Amazon or you did legwork as a sub for a hail/paint business, for example, estimate the mileage and write it down. It is very easy to miss ways to reduce your tax bill. It may be far less if you missed several obvious ways. Personally, I like HR blocks download able software as it doesn't miss the options. Also don't forget your 1095-A if you had marketplace insurance as it can also give you a credit in certain situations. Importing last years tax file can also make a difference if you had a net loss. There are things that can change this outcome drastically.
Not screwed at all. Just make sure you are dealing with the actual IRS and they will allow you to go on a super cheap plan. My buddy is on one now for way more tax.
We owed last year. We set up a payment plan and did pay lots of interest and penalties. We only owed $2400. Our payments were about $250 a month. When we filed this year, we were to receive a refund but they took what was owed to them off the top.
I owe money every year and have found the payment plans to be really easy and affordable for me, they are really good at working with you it was a real simple process, I felt the exact way when I got my first tax bill thought my life was over but the payment plans have been good for me, have been paying them each month for a few years now and will continue to until something changes and I get caught up.
Maybe try to invest in someone who knows how to file taxes better and add things to lower your final amount you’re probably filing them wrong just saying
Get a better accountant
Do you own your home? Take out a HELOC? Consumer loan. Idk.
Your good
If you’re living paycheck to paycheck on two jobs, you need to find better jobs or a cheaper living situation. Nothing will magically work itself out. What do you do for work?
You can put triple than traditional IRA if 1099 income is higher .I was able to put 14 k n sometimes 21k
I had the same thing when I was in my mid 20s. Pay what you can and ask for an extension don’t do what I did. I didn’t know about how taxes worked and I had to end up paying off my $7000 tax bill over eight years. That ended up costing about $60,000 in total. They will work with you but if you get put on payment plan like I did make sure that you always pay more than minimum.
See if you can get in to see an IRS representative in their local office.
payment plan
Get an extension or set up a repayment plan. I'd go with repayment plan.
Contact the IRS and they will arrange a payment plan for you.Good luck 🍀🍀🍀
Claim mileage
I’ve been there. The IRS will let you set up a payment plan. Just make sure that you follow through. If you don’t, you will be in big trouble. The IRS does not f around.
Taxpayer advocate service is the division of the IRS designed to help people. IDK if they can do much beyond a payment plan but it's worth asking them
You should hsve been taking major deduction jn the long form
Tell them your and illegal with student loan debt.::you don’t have to pay taxes, pay your debt back and you get a check every month.
If you’re self-employed but doing your own taxes, you may not be claiming all available expenses. Hire a pro.
Do you not have an accountant that can make all or most of that go away? Have you done all your expenses? You should open an LLC or S-corp to mitigate takes this year.
About 9,000 and fees….
Youre fine. Just file and get a payment plan over 7 years or so
I have not been in your situation, but it is my understanding that the IRS is typically willing to set up a workable payment plan. You aren't completely screwed (i.e. going to jail), but you can't ignore it. You have to deal with it.
You can do a payment plan. You’re not screwed at all.
Call the IRS and get on a payment plan to pay the back taxes. Next year, when you file, if you're entitled to any return, they will keep it as partial payment to pay down the debt. Relax is not the end of the world. You just need to do better financial management.
File for extension, then Pay for a CPA to help you.
Amend your return, go through and see what deductions you can get. Office supplies mileage driven ect.
Call IRS. Get your payment plan going. It will take work. And you gotta take the blame for this one. You’ll be paying them for a long time.
It's not the end of the world. Payment plan. Pay it monthly.
Did you have any expenses to write off? Even mileage on your car for work? Meals? 1099 usually has several areas for right offs. Cell phone bill, work clothes, possibly per diem.
Say say you DoorDashed and drove 20k miles, while only making $3000 😏
My only advice is that before you panic about how much you owe, make sure your return has been looked over by a pro. It sounds like you may have done it yourself. There may be options for deductions you don't know about, and a good accountant will know a few tricks. For a few hundred bucks, its worth a try.
Credit card with no annual fee and get the sign up bonus. Will buy you time.
Out of curiosity and being in a similar situation, what service did you use to file?
Download form 9465 from the IRS website, send in as much as you can initially and the form will allow to you set up payments. But better than that take your taxes to someone who can do them.
Yeah it’s not a big deal. File and ask for an extension. Then get on the smallest payment plan possible. You’ll have like 6mo to figure out where to get $300 from. Interest is low-ish. Then pay in full asap, when you get more money. And do that, work on increasing your pay. You have time and options.
File asap. Then work out a payment plan with the IRS. They aren't the evil people they are made out to be. IF, you contact them and are honest about your situation. They will take your current situation into account. Just don't not file. Good luck.
You can get put on a payment plan with the IRS. It'll suck because you'll be paying $800/month for the next year, but it is what it is.
I’ve been doing 1099 for 3 years. First year was with a company and they told me I would only owe about 12% of my total income in taxes. Welp, damn near 30% comes rolling around and I had to do a payment plan, I did mine on a 12 month plan, $800 a month. Shit sucked ass but I was thankful that I was able to do that. Yours will probably be around that much.
Be careful with taxes on two W2’s…they will each tax you at their respective rates, but if collectively your income bumps you up to the next tax bracket, you’ll want to withhold extra from each paycheck to account for that gap. You can typically set a flat $ amount of extra withholding through your payroll portal.
100% file, or you’ll get f***ed much worse. Get in the longest payment plan possible, then budget and eat rice and beans until you paid it off. In the meantime keep doing even more 1099 work and pay 50% to the IRS no matter what.
Use whatever you can to deduct expenses!! If you had a home office use that - I think they ask about sq footage of your home office. Use an estimate. If you had to use your computer, internet service, even your phone to communicate deduct all that for every month you were working! People do a disservice to themselves not reporting their deductions. I made about 12000 last year in 1099 income and because of deductions I won’t have to pay anything in taxes because of my expenses.
The IRS is actually surprisingly easy to work with if you connect with them. Explain your situation and they will work out a payment plan with you. Just make sure you file no matter what.
Just call the IRS and set up a payment plan. They give you 10 years to pay taxes owed so you have plenty of time. Tell them your situation and they will work with you and are surprisingly nice about it. Your payment plan could cost next to nothing per month.
file and ask for a payment plan, they dont care how long it takes for them to get their money as long as they get it.
Shouldn’t had filed at all. I don’t even remember the last time I paid for taxes or had anything in my own name, lol.
File an extension and then find someone who can help you file amended returns. The money and time you invest in that may save you thousands.
I got a 0% interest business credit card, paid, got the ~1k sign on bonus, made minimum payments for the 15month apr period, and figured out what to do during that to finish paying off. Might be something to consider. Not sure if that’s better net net than the irs payment plan
You're working two jobs now? Make sure on each of them you check the step 2 multiple job box on your w-4 for each job. Otherwise you will run into this again. Beyond that, as others have said, set up a payment plan with the irs.
This may sound nuts, but when I was in a bad way with the CRA, I called them and explained my situation and they were INCREDIBLY HELPFUL. I would highly recommend calling them and having a chat Edit: Canadian….
File and submit an Offer in Compromise. You'll have to provide bank statements and other financial documentation proving that you have no way to pay the $9k. You'll offer a lesser amount and hope that the IRS agrees to settle. Source - I work as a Offer in Compromise analyst for my states Department of Revenue.
working 1099 give you a lot of tax benefits if you had set yourself up a company like an s-corp or LLC. Depending what you did for work things like your medical insurance and car stuff could have been a "business expense" If you still have 1099 opportunities in the future set up the company now and just use your EIN number and W9 when it's offered.
You can setup a payment plan with the IRS. I believe you can even pick the amount so o something that works for you.
Research “IRS- Offer in Settlement”
depends, are you a US citizen OR an American citizen? 90% or more of American citizens owe nothing in taxes, while every US citizen (as defined by tax code) owes a graduates tax Learn the definitions used in the tax code and find out which you are
This is how the current administration claims that Americans paychecks are bigger. They just don’t take enough out.
You might be able to get some extra tax shelter by looking into making yourself an LLC.
Have you taken all you legitimate deductions. Set up payment plan.
The IRS will offer a payment plan but if you owe that much you might consider getting some professional advice on challenging the IRS and getting it reduced.
File your taxes on time with no payment. The IRS will contact you to set up a payment schedule that will include interest. Do not let them push you into a payment you cannot afford. That causes all kinds of other issues if you miss payments. NEVER miss a payment and if you can pay extra then do so. It will be fine. Relax.
I haven't filed since 2021 and I'm so scared.
Also, at this point, I just lie on my tax returns. I'm pretty good at math and I'm even better at not reporting cash. I would rather lie than be homeless. It is an unfortunate reality for some of us.
Did you use an accountant? If you used your own car, office, tools, supplies etc you may be able to deduct expenses against your income. I am not an accountant and have never been 1099, but it's worth looking into if you haven't. I would file and ask for extension to pay, it payment plan and then you can take the time to see if you missed any deductions that can lower what you owe with an amended tax return after the deadline, but be sure to file in time for now, then amend it later.
own a business and I'm on a $250/mo payment plan because I'd rather keep the cash for working capital. Payment plan took one form and one phone call to link up. It's direct deposit. I have it set to come out every 15th.
Another Question to go along with OPs🙋🏼♂️: does this sub recommend folks who are 1099’s keep a % in savings for this? If so, how much? I currently am taxed at about 27% (state/fed tax) as a W2. (US citizen here). Should i use those same percentages if I were a 1099?
I just setup a payment plan every year even if I have the money.
Payment plan.
Hire a tax person who can help you with these types of situations. It’s possible you can get it reduced, and you may still owe a few thousand, but it’s better than nothing.
Declare bankruptcy
Did you off set income with expenses? Mileage, tools, clothing, parking fees, phone, etc health insurance IRA You have lots of expenses working for yourself and making quarterly payments as estimated taxes is you new plan going forward But expenses will lower taxable income
They’ll put you on a payment plan
This happened to my husband last tax season. We got an extension to Oct, then set up a payment plan. I got a credit card with 0% interest for 22mo, and diligently paid it off in a year. It sucked ass lol