Wednesday, April 13th, 2011
108

Here's What Happens If You Don't Do Your Taxes

You, yes you, can do your taxes this year. Many of you are done, most of you haven't started, and a few of you are freaking out. Some of you are thinking: what if I just don't file? What will happen if I don't pay? What if I didn't file last year or the year before that? What will they do to me and will I be in prison with Wesley Snipes?

I have some answers to those questions! You should note that I am not a tax professional, that this is definitely not professional advice and that every situation is unique. Also you should be doing your taxes right now probably, not reading the Internet. But here's some experience, offered person-to-person, that is not professional counsel.

It is better to do a cruddy job and file than to not file.
When I say "cruddy job," I don't mean "making wild guesstimations" or being dishonest. I mean: If you can't nail some stuff down, forget about it and move on. For instance: Do you not have receipts for some expenses? Big deal: cut them out and forget about it. (These small expense-deductions don't generally have too much effect on your tax burden anyway.) Err on the side of "hurting" yourself and just plow through it. It's just not worth making yourself crazy over fifteen bucks!

You can fix your return!
It is easy to amend a return. It's also easy for the IRS to amend your return: "You do not need to file an amended return due to math errors. The IRS will automatically make that correction." Intense, right?

It is better to file and not pay than to not file and not pay.
What happened, you spend all your money? That's okay, pal! Do your taxes, send 'em in, if you have absolutely no money. You will incur not-totally-crazy penalties over time due to not paying, and they will want to talk to you about when you can pay. (Yup, it's always the broke people that have to pay more in this world.) That's not ideal, sure! But it's a lot more ideal than not having filed.

Okay, but should I be scared of the IRS?
The IRS only wants to hear from you. The answer, surprisingly, is a very firm "no"! Not at all! The IRS has some of the nicest, most understanding people I have ever spoken with in my life. True fact.

There's a lot of TV- and movie-propagated terror about the IRS. (As well, the whole idea of the government and money is anxiety-producing on its own, sure.) And the truth is… well, they kind of used to be a little mean? But that's actually ancient history. The people at the IRS are some of the funnest people ever! I have had long hilarious conversations with them on the phone. (For real, there are some hilarious ladies down in Atlanta.) IRS employees are like most civil servants; they deal with confused, freaked out and sometimes very dingbatty people (not you, friend!) every day—the kind of people who do not follow directions, particularly. So if you are not a jerk, they will be delighted to speak to you, at length. They will sometimes be like, "Girl, how did you get into this trouble?" and you'll be like "Oh, haha, I'm a mess! Mistakes happen!" and they'll be like, "I hear you! I get it!" Do not be afraid. What they want is to hear from you.

Should I be scared of my state tax department?
Actually… well, maybe just a little. The same rules apply as above—they do want to hear from you!—but, for instance, the New York State Department of Taxation and Finance seems to be a little cranky. They want their money, they want it now, and if you don't give it to them, they will take it. I'm sure there are some wonderful, caring people working in all of America's fine state tax departments!

What happens if you don't file?
Have I mentioned that the IRS only wants to hear from you?

No really, what happens if you don't file and don't pay?
Great news! Eventually the IRS will do your taxes for you. This is called a substitute return. Doesn't that sound nice? Well it's not particularly. For an agency that's devoted to taxes, they don't do a very good job at it. (Kidding.) So the good news is that your taxes will be done! The bad news is that they will take your reported income, slot it into the appropriate tax bracket, and say you owe that percentage. So if you made $85,000, bam, you owe 28%.

Also? Lots of people can't deal with taxes when they're even going to get money back! People are funny. But you should know that your refund disappears in three years if you don't file.

What happens if, like, I ignore the IRS?
Well, you'll get a ton of mail. And the problem with being "in trouble" is that your sense of being in trouble fades really fast. That's how people are built. Most people pay taxes because they're scared of the consequences. So, you don't file one year, and then… nothing that terrible happens! So you're off to the races. And then you get a scary piece of mail from the IRS, and you ignore it, and… nothing terrible happens again! It's very easy for the human mind to acclimate to this.

And then, they will make it so that you can't ignore them. (For instance, your debit card will stop working! Heh.) You should head that off at the pass. The moral being: even if you aren't scared of the consequences now, you will be later.

Ugh, they sent a letter to everyone I've ever worked for! How humiliating!
Nah, it's not. Years ago, the IRS sent out a letter to people who'd paid me money, informing them they had an interest in having that money for themselves. And half the people who got these letters—caring, decent, professional, adult-type people!—were like "Ha, I got one of these letters last year!" It was a moment of bonding. To be fair, one person was a little judgmental, but you are by no means alone in these issues.

So how do I work out paying if I haven't paid?
You know how GE and Bank of America don't pay any taxes? That happens because they're well-advised. You too should be well-advised. Down the road, if you end up in debt with the IRS, you will likely have a couple of options—usually Offer in Compromise or Payment Plan. These are actually not terribly straightforward. For instance, you can work out a payment plan with the IRS, after filling out quite a lot of paperwork, and having your financial life pretty well-surveilled by them, but the IRS is actually required to ensure that you have enough money and income to meet the payment plan. (They can't agree to a payment plan that's onerous.) But that doesn't mean that, even if you are on an installment plan, that penalties don't continue to accrue! So, many people find that they're often better off getting a bank loan. And Offer in Compromise is extremely complicated. With those, for instance, you cannot miss a yearly tax payment for at least the next five years, or the deal is off. So you are going to need to become an expert—but more importantly, you're also going to need to consult with a real expert.

Ugh, I don't know what to do!
Guess what? The IRS only wants to hear from you. Also? These things are never as bad as you think. Now go off to your quiet place and do your 2010 taxes. I can promise you'll be happy you did.

HELP I'M PANICKING!
Turbotax (and other products) are free to use to file an extension. If you can't do ANYTHING else at all, do that. I'm saying that even though they sponsored this post, and it puts me in an awkward position. But it's true! And I've done it myself with them.



Brought to you by TurboTax Federal Free Edition — Free to prepare, Free to print, Free to efile.

Sponsored posts are purely editorial projects that we are pleased to have presented by a participating sponsor, advertisers do not produce the content. This post is brought to you by TurboTax.

Photo by the one and only Mat Honan.

108 Comments / Post A Comment

soco (#8,225)

There's really no reason to not do your taxes, unless you're a crazy that believes you're too special for taxes. Otherwise, as Choire put it so well above, the IRS will work with you. They're not scary boogeymen that just want to eat your children.

Rob Genaa@facebook (#240,966)

@soco, You are a moron copsucker coward!

If IRS isn't being notified that you have "income" then you will likely never hear from them, EVER!

Simply go about your life as a somewhat freer person than most, make sure cowards aren't ratting you out to It's Really Stealing and their non-existent tax law scam, put all your assets into trusts to protect yourself from government leaches in general, and you won't have anything to worry about.

I haven't filed in 20 years and not a peep from It's Really Stealing ! Neither have over a dozen of my friends.

Many, like TaxManEA, file for only one reason, FEAR! They are cowards, won't admit it, and pretend it is the "law" but can't find that "law"; so they make excuses like "everyone knows you have to pay income taxes" or some other cowardly unsubstantiated drivel.

But, you can keep living in your fantasy if it helps you think you aren't a yellow coward slave !

Here I am Nazi IRS scum! Come and get me! Be sure to look at my file first though, you will find that I am listed as a PDP (Potentially Dangerous Person). You should have a category of EDP for me though, Extremely Dangerous Person! You can go on to all those sheep for your easy money and leave people like me, who will make you pay dearly for your lawless corruption, alone to enjoy the fruits of my own endeavors!

@ rob genna, but can you retire safely by doing your method?

Moff (#28)

I know a dude who, uh, didn't file his New York state taxes in 2004 in a fit of pique, because he figured it was a big state and, hey, they probably wouldn't even notice, right? And then it turned out they did notice, but it was 2008 by then, and his several hundred dollars in taxes had multiplied (thanks to penalties and late fees) into a few thousand (it was really crazy how much the amount became, really!), and his unsuspecting wife had already married him, and she was pretty irritated and stabby when that happened.

Also, now he gets regular mail about the fucking NYC subway tax or something all the goddamn time, even though he lives in Wisconsin now. So really, just do your taxes.

After having a barely-speaking English IRS auditor go through my records, at my house, for two full days, trying to comb out something to make her efforts pay, I can tell you the tone of this advice is way off. But if this "carrot" gets you off your a** and stop procrastinating, then great. Not everybody responds to the stick.

Do whatever you can to stay away from the stick. If you think doing taxes is frustrating, wait till you get audited. And if they find nothing, they'll go back and audit every year past until they do.

By the way, they'll want you to pay taxes on bartering. Isn't that fun?

riotnrrd (#840)

Jeez, how hard is it to spend $60 and buy TurboTax? Boom: one hour later you're done and it's time for cocktails.

deepomega (#1,720)

@riotnrrd Yes yes yes. And it remembers your returns from previous years! I'd totally forgotten that I've been amortizing my home-office-work computer! Thanks, TurboTax!

@riotnrrd That really should be their marketing campaign. "Drinks in an hour!"

Bittersweet (#765)

Thirded. Even filing an itemized return doesn't take that long because TurboTax remembers all your charities and mortgage info.

@riotnrrd: you wait for cocktails til after doing taxes? I find drinking while filing further enhances the TT process.

riotnrrd (#840)

@Bittersweet Good point. Also, I can deduct the cost of that bottle of bourbon as tax preparation expenses. I am gonna re-do my taxes tonight. Party!

Actually, they are scary boogeymen that want to eat your children. How do you think they get such compliance?

@Indoor Camping@twitter The audit experience can be all over the map, from wildly unpleasant to difficult to nuisance. I didn't address that here because it's (largely) unrelated to tax payment and lack thereof–pretty much anyone who can claim to tell you why you'll get audited is going to be at least in part wrong!–but the commonality of stories that I've heard from everyone was that the experience was arduous. Even in the cases where people *got an additional refund* from the experience!

Rob Genaa@facebook (#240,966)

@Choire Sicha, Making excuses for why people should tolerate being extorted and robbed, at gunpoint which is what government does, makes you a willing shill for evil!

"Muggers are generally the nicest people you would ever want to deal with in a very stressful situation, so just give them all your money every year and things will work out fine!" PROPAGANDA from a coward slave who loves misery when he has company with other coward slaves! You aren't an American, you are a colonist!

dado (#102)

One time the IRS helped themselves to $850 right out of my bank account…I found out after it happened. I didn't like that very much.

@dado I would imagine they were trying to discuss that with you prior to that! :)

dado (#102)

@Choire Sicha I had my fingers in my ears.

@dado Oh sure. That's the easiest way for me in this world. LA LA LA LA. And then… boom, so long money!

jaimealyse (#647)

I would love to learn more about taxes for the "self-employed" who get those lovely 1099s. I've previously had mostly W-2s with a pittance of 1099 income, but will be transitioning to mostly/entirely untaxed "contractor" income. I've heard that I should set aside 30% for taxes? Is that accurate? What about making estimated payments throughout the year?

Also does anyone know how being a full-time grad student affects taxes, other than by drastically lowering your income?

@jaimealyse You should DEFINITELY, definitely be looking at paying quarterly, based on your estimated annual income. It's very hard psychically to get chunks of money handed to you all year and then, come early the next year, you're like, oh God, I have to GIVE A LARGE PORTION OF THAT SPENT MONEY AWAY????

You are actually sort of required to make quarterly payments, under one interpretation, on the grounds that you are a "business." But that's not like, something you'll get in trouble over. (In my opinion, etc.)

deepomega (#1,720)

@jaimealyse Being a full time student mostly gives you options for write-offs. Like every tuition payment you make, and books, and etc., is write-off-able. This is a huge deal and can knock your net tax burden down a lot!

Also, sorry to disagree Choire, but I def got in trouble for not paying quarterly in my heady days as a freelancing college student (?!?!) where all my income was from scholarships and 1099s. The late fee wasn't awful, relative to the tax burden, but it was also wholly unnecessary. Quarterly filing is 100% required.

carpetblogger (#306)

@jaimealyse Paying quarterly is your friend. It's much easier to pay four little amounts than ONE BIG AMOUNT. And they sort of demand you do this (by making you pay penalties and interest: true fact)

jaimealyse (#647)

@carpetblogger @deepomega @Choire Sicha Thank you all! I've been good so far this year about putting 30% of every 1099 paycheck into a nice, separate savings account – can I just send that account's total quarterly to the IRS? Or do I really need to try to predict the total untaxed income and send a quarter of that? (It's tutoring work, so really hard to predict.)

(Sorry if I'm taking advantage of the serviceyness.)

carpetblogger (#306)

@jaimealyse Technically they base this year's payments on last year's income. So if you made 40,000 last year you should pay as if you'll make that this year. If you make more you pay more at the end :( if you make less/generate lots of deductions, you'll get a refund :) It's a crapshoot

But good for you for saving money for taxes!

MollyculeTheory (#4,519)

@jaimealyse Ha ha I am dealing with 1099's for the first time, and the hilarious thing is that I am not an employee, but not-not an employee either? There is no legal consensus on what exactly a postdoctoral fellow is & what the tax requirements are! Fun!

jaimealyse (#647)

@carpetblogger That is madness! But maybe it's time for me to call Choire's dear friends at the IRS directly.

deepomega (#1,720)

@jaimealyse Yeah you're really supposed to guess your year end income and pay based on that. If it were me, I'd try and overpay a bit, and consider any refunds savings-able as soon as they showed up in April.

Bittersweet (#765)

Hey guys, is paying quarterly necessary for non-1099 non-taxed-upfront income? Like, personal-checks-for-violin-lessons income? A, um, friend wants to know.

@Bittersweet Ha! Well, if your normal income has withholdings, not… necessarily? But it sort of depends: like, is YOUR FRIEND running a business? Because it should be treated like a business then–to your benefit actually.

Mindpowered (#948)

@Choire Sicha
^^^ Tags???!!

But um yeah, it also depends how much you like make? Like if you're pulling down 50 – 60k a year in doing this then, maybe you should, but if it's under 10k , well you know…..

Bittersweet (#765)

@Choire: OK, it's really my husband, teaching private violin lessons on the side to supplement pub. school teaching income. And get out of the house on Sat. mornings.

@Mindpowered: closer to the under 10k than the 50k. Probably well under 10k, actually.

deepomega (#1,720)

@Bittersweet From very recent experience, I can tell you there's a limit to quarterly-requiring income. I can say confidently that under 10k doesn't seem to trigger that requirement for quarterly!

mishaps (#5,779)

@jaimealyse Graduate students who are working AT THE SCHOOL where they are enrolled, WHILE THEY ARE ENROLLED AND TAKING CLASSES, are exempt from FICA, which is a lot to be exempt from. Consult a professional, etc.

I vaguely recall something from my own long-past days as a graduate student about how universities made it very easy for graduate students to not declare fellowship income at all, but of course that would be wrong.

Lockheed Ventura (#5,536)

"The IRS has some of the nicest, most understanding people I have ever spoken with in my life. True fact."

Uh, you need to stop hanging out at the post office so much. The IRS is a very mixed bag of folks.

@Lockheed Ventura Ha! Even I've hit a few people I didn't enjoy there. But my sample size is pretty big. :)

To be fair though? I also have never, ever had a bad time at the Post Office, the DMV or any courthouse! That is because I am excessively nice to people in these positions.

Tulletilsynet (#333)

@Choire Sicha
This is not helping my diabetes.

Can Cho persuade, like, Geico or somebody to sponsor a post where Alex Balk visits the DMV office in Times Square?

@Choire Sicha I've found being excessively nice to be a generally excellent way to deal with people.

@Tulletilsynet I will admit that I almost died of having a stroke while registering a car from out of state at the Herald Square office. IT WAS ROUGH GOING.

stuff_is_things (#6,108)

@Choire Sicha Totally second what Choire said. Having dealt with the insane bureaucracy of post-Soviet countries (where totally different rules apply) I am always super nice to IRS/DMV/billing type people in developed countries, even when the company they work for is fucking me over or being ridiculous, and it pays off big time. Just in the last month I've got them to reactive my shut-off-for-nonpayment phone and let me do an installment plan on a 2 year old gas bill after missing payments on like 4 previous plans (as one of those 1099 types I am REALLY bad at predicting my income… and also I'm from Florida, I didn't know my winter heating would cost like £600???).

birah r. (#4,504)

am i the only weirdo who did her taxes in january?

@birah r. Pretty close, yes. Freak.

Br. Seamus (#217)

@birah r. Had mine done February 4th. A bit later than would have liked, as W-2 did not timely arrive for a January filing!

zoom (#10,138)

@birah r. Being in the "married with 2 kids with a combined household income in the bottom half of five figures" bracket encourages me to file as soon as I get my W-2's. Even still, that's usually in February. Freak.

RocketSurgeon (#1,632)

@birah r. I did mine the weekend after I got my W2. Refunds were deposited mid-February. I don't want the government keeping my money a day longer than they have to.

queensissy (#1,783)

@birah r. – I did mine in January too, and then got a stray 1099 in March. Feh. It didn't change my tax bracket, so I'm not filing any amendment. I shouldn't get into trouble over this, should I?

@queensissy Errrrr welll… it's nice to accurately report ALL your income! Because THEY get those 1099s too. :)

queensissy (#1,783)

@Choire Sicha Frown. But thanks for warning.

Screen Name (#2,416)

IRS Tips: If your payout is more than 300 times your initial wager, then for tax purposes you should declare yourself "A Pretty Good Gambler" and quit your job to focus on gambling full time.

deepomega (#1,720)

Write off your slots habit as a business expense!

Tuna Surprise (#573)

@deepomega You can offset your gambling winnings by gambling losses. True fact! Don't forget to ask the casino for a receipt.

caw_caw (#5,641)

My first thought on seeing the headline was "I know this one! I know this one!"

City_Dater (#2,500)

Calling the IRS when you have done something stupid but are not actually usually a stupid person is entertaining! While trying to file my taxes for the Year of Working for Insignificant Amounts of Money in Three or Four States, I screwed up my multiple returns (this was pre-Turbo Tax and pre-being able to afford to hire an accountant who gets paid to figure crap like this out). It was totally a "Girl, how did you get in this trouble?" call, and I have never feared the IRS since. They want to help you not be an ass, basically.

Wait, is this all hype for The Pale King?

@Chiaro Canard@twitter +1

You can even do taxes yourself: it sucks, but you start to really get how much money you are giving the govts., whether it goes up or down each year, how tax brackets and the marriage subsidy work, and the insane income tax breaks that some people get. One year I called the IRS people MULTIPLE times with questions and they were informative and helpful! But truly, the NYS people are truly mean.

@morose_delectation Yes! I didn't want to really come out and say it but… NEW YORK STATE I DISLIKE YOU.

Tulletilsynet (#333)

@morose_delectation
So true about the NYS people. Like many mean people, the NYS people, and what an apt name for NYS people, want to make it clear that they are consciously being mean. This you get in the instructions they give, and in the number of different schedules a normal person might have to file.

caw_caw (#5,641)

State of California people are not super duper nice either

@caw_caw Fortunately the state of California is almost donezo. (I have to say, I really feel for state employees where they are being furloughed and where times are tough! So I sympathize with them as human beings and as workers and also I think their office and procedures can totally go drive off a cliff in outer space.)

Joe Murray (#8,792)

if I don't fill in a return – do you get a fine on top of your tax bill when it arrives?

Br. Seamus (#217)

@Joe Murray Yes. IRS Tax Topic 653 states, in pertinent part, "If you owe tax and don't file on time, the total late-filing penalty is usually five percent of the tax owed for each month, or part of a month that your return is late, up to five months. If your return is over 60 days late, the minimum penalty for late filing is the smaller of $100 ($135 for returns required to be filed after December 31, 2008) or 100 percent of the tax owed."

Br. Seamus (#217)

@Joe Murray This only applies if you owe tax – if you're due a refund, the government won't be paying you interest if it goes unclaimed.

Jackie Thomason (#7,092)

@Joe Murray And if you don't file within a few years you're refund will go bye-bye….Voice of experience here

Joe Murray (#8,792)

@Joe Murray Thanks dudez.

TheRtHonPM (#10,481)

I hate that you have to pay for your own postage in order to mail your tax return: I pay the government thousands in taxes, but then they're not going to just be cool about a 50 cent stamp or whatever it costs now. I don't know why that bugs me so much.

@TheRtHonPM Ha! I kind of hear you. I know the Post Office is suffering, and I KNOW it makes no real-world sense, but honestly.

Also: efile that puppy.

flossy (#1,402)

Related: Sleeping with Lottery Winners, pt. 17: Disappointed boyfriend (with drugs)

MollyculeTheory (#4,519)

Whyyy are state taxes 470 times more confusing than federal tax whyyy.

Tulletilsynet (#333)

@MollyculeTheory Yeah I know, right? Why can't it just be,
Line 1: Write down what you owed the IRS;
Line 2: Divide by Line 1 by x, write down the number and pay us that.

Because that figure already has the bejesus adjusted out of it. Why adjust more bejesus out of it?

Bittersweet (#765)

@Tulletilsynet: "bejesus" is a technical accounting term, isn't it?

Tulletilsynet (#333)

@Bittersweet
When I do accounting, bejesus is not the most colorful of the technical accounting terms.

whizz_dumb (#10,650)

I had a blast watching turbotax tally up how much the IRS owed me. It took maybe two hours in February. I'm saying declare a 1 instead of 0 if you can.

mishaps (#5,779)

@whizzard There are those who say "why would you let the IRS hold your money for you that way?"

Of course, those people have more self-control than you or I do.

Annie K. (#3,563)

Looking at the tags above, I see THE IRS looks a lot like THEIRS. Just my little joke. Because the husband thinks he can wait until August to file and that makes me nervous.

Nick Douglas (#7,095)

@Annie K. DIVORCE, HIT THE GYM, GET ON OKCUPID

Bryan Keller (#3,804)

I file an extension every year. It just means I have to wait longer for my refund. The IRS doesn't consider an extension to be late. They'd rather not deal with everyone's shit at once anyway.

@Bryan Keller I love an extension. Let the record reflect that if you are NOT getting a refund, you really don't want to file extensions if you can help it though! (Penalties apply.)

Aatom (#74)

I heard that on Knifecrime Island, you hand all of your money to the government, and they give you bad dental work in return. #THIS IS PROBABLY NOT TRUE

MollyculeTheory (#4,519)

@Aatom But you get one deduction per knife.

Nick Douglas (#7,095)

@Aatom Nice try, Jon Kyl!

zidaane (#373)

I separated and my wife would not send the me her forms for like 5 years. I knew she was not saving anything and working as an independent contractor (real estate!) and this was going to kill me. I also knew I couldn't just file my own return as she would be f*cked but I didn't have the cash for her as I was already sending her money so, I just put it off. When they finally did garnish my check (after ignoring the voluminous email Choire describes) it was %75 of my check!!! Don't do this!!! So, I had to quickly do 5 years of returns to be eligible for a payoff schedule and got out of that in a few months. My work was like wha??? You're our ERP programmer and do all the business accounting!w!t!f! The tipping point for the IRS is something like under 25K to get a payment plan and you need all your returns in. And, yes, everyone I've ever talked to was the most helpful, understanding people you would ever have to deal with in stressful circumstances.

@zidaane Wow!

That's sort of the best part–when your office is like, BUT, UM, WHAT, YOU HANDLE FINANCE????

zidaane (#373)

@Choire Sicha I'm not sure embarrassing accurately describes it. I'm sure they were like "ARE WE MISSING MONEY?god?please?no?" and "WHO IS THIS F*CKUP WE THOUGHT WE KNEW". Anyways, all better- after they major chunked my checks I only have a manageable piece left to payoff on a very reasonable schedule although, the wife doesn't return calls as much because she just assumes it's horrible news from the North. I'm still waiting for her W9's for this year. It's in the mails…

@zidaane Couldn't you have filed separately? Or is that not how that works?

cherrispryte (#444)

Yes, but if instead of paying the District of Columbia the $44 I apparently owe them, can I donate it to my local PP instead? I'm pretty sure the Mayor's got my back on that.

@cherrispryte The mayor agrees!

cherrispryte (#444)

@Choire Sicha have you seen him say anything to that effect? Because I will totally do it.

@cherrispryte I think he said it while he was in jail. NO, THAT IS A LIE.

Choire: You've given good advice. Yeah, problems happen – but fill out the forms and file a return. The software makes it reasonably easy and after you finish you can chat about it at parties.

pois-chiche (#11,133)

Choire, do you have any advice that is not legal or advice for someone whose partner has not filed in YEARS? Before you jump to conclusions, I'm sincerely asking on his behalf- I'm super type-A and filed back in January.

When I say years, I'm talking at least 5-7 years of burying his head in the sand. The state has a tax lien against him. All those letters from the IRS? Wadded up and squirreled away far from my prying eyes.

I would be more than happy to do the bulk of the paperwork, since it is such a source of stress for him, but I don't even know where to begin. He is basically immobilized by anxiety about it now, which makes any productive discussion impossible. I feel like if we could break things down into baby steps, he could start to dig himself out of this mess. Any ideas for someone in this situation?

@pois-chiche Ooh, have we met? I rather feel like we have! ;)

I totally feel the pain of the Ostrich v. Type A relationship. (Uh, from the other side, obviously!) It's hard on both parties.

I think what I would say is this: you go and you say, "Hey, listen, I want to talk about That Horrible Thing You Reasonably Hate Dealing With. Your financial life is important to me, because it negatively affects you. But also, it negatively affects me. I'd like to help you make it go away. Can we do that? It's important about us."

And you can explain to him what you'll do, which is:

The first thing you guys would do is open the most recent letters, if you can find them, just so you have a VAGUE sense of what's going on. If you can't find 'em, forget it! The second thing is two choices: you can find someone to help out, or you can make the call to the IRS yourselves and say, "Hey, we want to make this situation right, where do we even start?" And they will actually tell you.

Depending on how much he owes, he may be assigned a case officer. (The IRS divides cases into above $25K and below $25K; there's a special department that handles the bigger money, and you're more likely to get a case officer actually assigned if you're in that camp.)

I do think you've been really kind to him about giving him "his space" for his particular (and totally not uncommon!) brand of loopy. And I think that in a relationship, people's financials intertwine, and it's important for each to try to keep up their side of the equation. So it's really within a partner's rights to make the case that this has a negative effect on you. (It's hard to get a new rental, much less buy a house, with someone who has things like tax liens.)

Sorry I didn't reply earlier. I was doing expenses. Heh.

Nick Douglas (#7,095)

@pois-chiche I, um, know someone in this situation. I would recommend that you emphasize to your partner that by doing something, he can, in time, make this all go away.

Because that's what he wishes right now. He wishes it had never happened. He wishes it would go away. And he needs to learn that to make it go away, he has to let you help. He has to stop ignoring it.

Ignoring the monster makes it grow. Fighting the monster makes it die.

He is very lucky to have you trying to fix this for him. I (this is an opinion) would seriously judge the health of your relationship based on how well he responds to your offer to help. Because everyone should be so lucky as to have a loved one trying to take care of their biggest problems.

Aaaanyway, the uh guy I know broke down and told his girlfriend about it, and they were really scared because the debt sounded like something that would take very many years to pay off, even with her help. And then they called an accountant and that accountant helped show that the debt could really be something that the guy had enough money to pay off immediately. ("Immediately" if you don't count the few months of extra time the accountant bought by notifying the IRS that he was handling the problem.)

So! Be helpful, gently but firmly ask that he work with you because you're here for him, and get a professional to look at these things. (No offense to TurboTax.)

pois-chiche (#11,133)

@Nick Douglas Fortunately, events have conspired to make him much more receptive to a conversation. Unfortunately, those same events have left him with a serious injury (one that he will recover from, thankfully) and unable to work, so I think the biggest obstacle right now is having to acknowledge the actual dollar amount. I have a vague idea of the amount, just from doing some sneaky credit checks on him, and he definately falls in the under 25k camp. So there's that!

Ultimately, the price he will have to pay will be worth the peace of mind it will bring.

pois-chiche (#11,133)

@Choire Sicha I think our paths may have crossed before on a blog that shall not be named. :)

As I stated below, he's finally opening up to talking about his tax situation and all the psychic baggage attached to it. He's got some pretty specific career goals (opening his own business) that will be hindered by his not being able to get a loan. Plus, kids, homeownership, and marriage- all things I want to engage in with a somewhat financially stable partner.

I think I'm going to have to suck it up and make a call to the IRS. Since he's been an independant contracter getting paid under the table for the past several years, the whole situation is a hot mess. But thanks to your article, I won't be making that call from a payphone in a trenchcoat and wig, since I now know the Man won't be coming for my first born.

Nick Douglas (#7,095)

@pois-chiche Oh man, if he's an independent contractor, then an accountant can help you PUMMEL that amount owed. Really. That uh guy I know got his amount owed sliced down by well over 60%, thanks to all the independent contractor deductions an accountant knows about. It felt REALLY GOOD to talk to the accountant and learn this.

So I hope your guy has a home office, and I especially hope he works in a creative field where many "entertainment" expenses legitimately count as research! But even if not, independent contractors really have a lot of ways to slice down the amount they owe. The estimate from the IRS is, as Chorie said, an ESTIMATE, one that only uses a standard, not itemized, deduction.

zidaane (#373)

@pois-chiche I changed my plans to move to Chile for the fresh lake water and less IRS mail after I filed my 5 years of returns. You would think 'OMG, they will totally scrutinize these returns' but they really just want the paperwork. This would be the Sacramento office (for late and amended returns) and I guess they have better things to do with their time.

dntsqzthchrmn (#2,893)

La la la la la la la la

erikonymous (#3,231)

I can personally confirm what Choire says about the niceness of the people at the IRS. When I finally got a couple of them on the line (after about an hour wait), they were SO NICE!

My son is not going to file his State Income Tax because he said it will cost him more to file than his refund. What are the pros and cons to his choice?

AngelinaL (#9,601)

Even if you can’t pay your taxes, you still need to file your taxes or at least file for an extension. This lets the IRS know that you are aware of the situation and you are trying to resolve it. After you file your taxes or file for an extension, you need to communicate with the IRS and try to negotiate a payment plan so you can pay the IRS your taxes. You can ask for an extension (a set time frame to pay your tax bill), or enter into a payment plan.
Penalties and fees will continue to be assessed, so you will need to pay your taxes as soon as possible – even if that means taking out a payday advance online to do so.

I found your blog very interesting and informative. Thanks for sharing this post. Payday loans no credit check

JohnSmith234 (#234,560)

Our good friends have a business that was never registered as a business in California. They want to become legitimate and register the business and start paying taxes… If they register now and begin to pay for the current year, will the IRS look into past history regarding the transactions of this company, or will it be looked at as a clean slate / a new business start up…

Thank you much

peterwayne224 (#238,388)

Thanks for this article. I will now be sure to do my taxes always! Does anyone know anything about how to find a good cpa crystal lake? Would a cpa be able to help me do my taxes and avoid bankruptcy? Money matters!

helpme (#238,807)

I am so hoping you can shed some light, I've been searching for answers for a few hours now and came across this. I just received a certified mail thing from the irs, it has the number 6679 on it. It's late so I haven't been to the post office to get this yet but I'm super scared. I looked it up and it says something about failing to file with a foreign coorporation. Well, I have a small business, I'm a distributor for a company which is in the USA and we get a form at the end of the year to file our taxes with so I'm quite confused why I"m getting this mail. I've been with the company for under a year so it shouldn't have anything to do with last year. Thanks

realmoxies (#242,857)

Ok, here's one for you… I have completed my MA taxes and made an error, they corrected the error and now I have received a Notice of Change to Your 2012 Income Tax Return" showing I owe $202.00. Fine, they are correct, when I try and call in and pay it by credit card, I'm unemployed, they tell me that they can't accept payments by credit card until after April 17th at which time they will send me a bill for the amount owed AND INTEREST AND ANY PENALTIES!!! fXXXING Crooks!!!!!!! They force me to wait for a bill and then charge me for the late fee and penalties????? WTF

aketian29 (#243,094)

A bit later than would have liked,

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