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Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I recently received a CP59 notice from the IRS. I owe them

Resolved Question:

I recently received a CP59 notice from the IRS. I owe them two tax returns but haven't filed them yet because I had trouble obtaining my 1099's. Also, I had/have no clue how to do my returns since one return involves 1099 and W-2 income. I figure I'm going to owe the IRS money and I'm in a sticky spot with that because I lost my job a month ago. I really don't know what to do and am losing sleep over this, plus I'm worried about possibly going to jail even though I'm not deliberately trying to screw over the IRS. I just don't know how to do my taxes and lack money right now to pay off any tax debt. What should I do?
Submitted: 5 years ago.
Category: Tax
Expert:  Merlo replied 5 years ago.
HelloCustomer

Unfortunately, the problem will not get any better by waiting, so you should try to file your returns as soon as you can.

When you have both W-2 income and 1099 income, you still only file one return. The income from your W-2 form is reported directly on line 7 of your Form 1040. The income from your 1099 form is reported on Schedule C. On Schedule C, you also list any deductions you have in connection with your 1099 income. The net income then transfers over to your Form 1040 and becomes part of your taxable income, along with your W-2 income.

If you need assistance in preparing your returns, the IRS offers free assistance to taxpayers in doing this, at any of the local IRS offices in your area.

Once you get your returns prepared and have a better idea of where you stand, you can work with the IRS to set up an acceptable payment plan to pay off your tax bill. If you are currently out of work, they will take that in to consideration when determining the amount of your payments. Once you return to work you can always then increase your payments to get the debt paid off.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you pdsgrrrl.

Customer: replied 5 years ago.
Thanks. How long do I have to respond to the CP59 letter? Is the IRS more likely to work with me and not throw me in the pokey if I come forward and cooperate with them, as opposed to burying my head in the sand?
Expert:  Merlo replied 5 years ago.
Hello again pdx,

Generally you have 30 days to respond to the letter. And yes, the IRS will be more willing to work with you on this the sooner you get this taken care of.

No matter what ends up happening, it is extremely doubtful you would have to fear going to jail. The IRS really does not prosecute many cases, and when they do, it is normally someone who owes hundreds of thousands in taxes and has been involved in some type of fraudulent activity.

For someone in your situation, the worst thing that usually ends up happening is having a lien placed on your property or a wage garnishment. But if you can work out a payment plan with them, this can also be avoided.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you pdx.

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and 6 other Tax Specialists are ready to help you

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