IRS-related question

[OneGrassRoot]

I'm always hesitant to call and ask the IRS something, as they have to pull up my file and I'm afraid that red flags me in some way since I already owe them $$. Paranoid, yes... but I'd rather ask here first.

Here's the deal:

I have filed for extensions the last few years due to various things: divorce, not getting 1099's on time and, most importantly, not having the $$ to pay the taxes owed (single parent, no health insurance, blah, blah). When I do file, I have arranged to make payments. I am in the process of paying 2005 taxes now.

Plus, my dad just passed and, even if I did have the $$ to pay what's owed for 2005 AND 2006, I haven't had time to deal with doing a tax return for 2006.

I know that once I file the 2006 return, I have to pay the amount owed for 2005 in full (once more is owed and on record in a return, it negates the previous installment agreement).

I just downloaded the extension form (4868) and it is asking for my estimated tax liability for 2006 and that I must pay SOMETHING toward it. I honestly don't recall having to put in the estimated tax liability in previous years, nor have to pay toward it in order to file the extension.

My fear is that by having to file the extension for 2006, and by having to estimate liability and PAY something toward it in order to file the extension, it will make my current installment plan for 2005 void, and I'll have to pay that amount in full. I'm in deep, deep shit then.

Any insight and/or suggestions?

[OrangeCountyDemocrat]

1. Re: Extension

You don't actually have to pay anything if you don't want to.

Just figure out how much you have paid in for 2006 via Withholding, Estimates, and put on the Payments line. Then make the Liability the same amount, and it will show a 0 Balance Due.

The IRS doesn't really look at those amounts, they're more to let you know if you want to make a payment by the tax return due date.

Keep in mind though, that if you don't pay the full balance, they'll charge interest & penalties beginning April 18 since that's when taxes must be paid by.

[az chela]

2. Call H&R block or your local library.Both can help you and the advice

is free

[hfojvt]

3. check the IRS website

www.irs.org Do it from a library computer if you are paranoid. I never file extensions and almost never owe tax so those are beyond me. Wouldn't what has been withheld from your check be considered 'paying something on your tax liabilty' or are they talking about net liability rather than gross.
Also, this type of question should be in the lounge.

[Pawel K]

4. Dont take my word on it as I'm not 100% sure but I was in a similar situation with my extension

Last year I needed to do an extension. It asked me for my estimated tax liability. I put down 0 knowing this was not accurate. Finally when I did file in September I had to pay around $150. A month later I got a letter from them that I owed interest on the payment as I did not pay anything in April as I should have. The interest was minor on $150, I think it came out to like $8 or something.

However, you really shouldn't worry about calling them. I'm not aware of any red flags that go up when you call if you owe them money, I had to do this numerous times and never had a problem with it.

[Mojorabbit]

5. My experience

with the IRS is they bend over backwards to help you with a payment plan. I'd call them.

[OneGrassRoot]

6. Thanks everyone. I guess I'll go ahead and call....

I'm self-employed, and not in a position to make estimated payments, so there is no $$ paid until I actually file a return.

When I first had to do this (make payments), I spoke with several IRS reps and they grilled me as to why I can't pay in full. I as calmly as I could explained that I simply don't have the money due to divorce (dumbass me didn't ask for anything), no health insurance and several health-related issues at the time, and being a single parent. It's made me paranoid about interactions because, sadly, my situation hasn't changed for the better and I hate being grilled about why I'm such a mess. LOL

But, as someone wrote, since I have reliably made payments for two tax years now (paying the first in full, then beginning payments for the next tax year), hopefully they will continue to work with me. Actually, they nor I have an option. LOL

Thanks again!

[Raven]

7. RELAX! File the extension and estimate the tax owed.

If you pay a low ball estimate, you'll pay a penalty based on the difference but nobody is going to throw you in jail or nullify another payment plan. The worst thing you can do is blow by the tax deadline. So file the extension and if you need to state a reason, death in the family is good enough. One thing that I would advise is...don't get into the habit of filing extensions if you can help it. It is addictive. I did this when I was practicing law because I was just "too busy to bother". Not a good thing to do. The main thing is not to dig any more holes! Good luck...and relax!

[tcfrogs]

8. Don't be afraid to call the IRS

It is not an inherently evil place. There are actual human beings that you will speak to. :)

I deal with them almost on a daily basis, and you won't be red-flagged for asking questions.