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jgordosea, Enrolled Agent
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Experience:  I've prepared all types of taxes since 1987.
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Retired at 59 1/2 but needed all of 401K to pay house off ...

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Retired at 59 1/2 but needed all of 401K to pay house off and bills to do so,thought tax advisor took out enough for taxes, but now the Tax man sayes we still owe $7800.over the amount we have already paid and we do not have it ,my wife is 62 and I am now 60, we are in a mess due to bad advise, any suggestions?
Submitted: 6 years ago.
Category: Tax
Expert:  jgordosea replied 6 years ago.

Greetings,

First, you should request a waiver of any penalty that is proposed for late payment or underpayment (but will have to wait until it is proposed) based on reliance on your tax advisor, and on your prior record of paying on time.

Taxpayers wishing to pay off a tax debt through an installment agreement, and owe $25,000 or less in combined tax, penalties, and interest can use the Online Payment Agreement (OPA) or call the number on the bill or notice (have the bill or notice available, along with the social security number). A fill-in Request for Installment Agreement, Form 9465, is available online that can be mailed to the address on the bill.

Form 9465 can also be included with your tax return or used to reply to the bill (in writing or via phone) when you do not fully pay with your submitted tax return. You will be charged a one time user fee of $105.00, as well as interest on any tax not paid by its due date.

You can suggest the amount that will be paid monthly and the day of the month that the IRS will have the payment. Direct withdrawal may be better than having to send the payment by mail each month. Acceptance of payment plans for debts less than $10,000 is automatic if you have been compliant in filing and paying in the past.

It is best to choose an amount that you are certain you can fit into the budget each month as it is not worth the trouble to try to reinstate the agreement for not meeting the terms. You can always send additional payment in addition to the required monthly amount to get it paid off sooner and reduce the interest that does continue to accrue on the unpaid balance. If you can pay about $250 per month you would have it paid off in less than three years, including interest.

For more details, see http://www.irs.gov/businesses/small/article/0,,id=108347,00.html

Of course, you may choose to borrow the funds instead if you can get a better interest rate than the 8% the IRS currently charges (and perhaps without a setup fee).

I hope this helps with getting your tax debt paid.

 

jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3032
Experience: I've prepared all types of taxes since 1987.
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