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Category: Tax
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Experience:  over 40 years experience in tax matters
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I keep borrowing from my retirement account to pay taxes.

Resolved Question:

I keep borrowing from my retirement account to pay taxes. It is just snow balling and I will not have anything left in there. I am 56 yrs old. What is your suggestion that maybe I can do to stop this. Thank you.
Submitted: 5 years ago.
Category: Tax
Expert:  CGCPA replied 5 years ago.

Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.


You need to first update you withholdings to have sufficient money withheld to cover your tax obligations. That, in turn, may require spending changes in your personal life. If you do not do these things you will be in a constant game of catch up with this problem.


Another thing you can do to help regain control over your life is to arrange a payment plan with the IRS and state tax agencies. For them to accept such an arrangement requires that you have enough tax withheld going forward to avoid a repeat of this situation. If the tax owed is large (over $10,000) you can also submit an Offer In Compromise (OIC). Although an OIC requires tax agency acceptance, it does give you the opportunity to settle the past debt for less than full value. The forms for an OIC and payment arrangements can be obtained at the IRS web site and your state tax agency's web site.


If you need additional assistance with this, please feel free to ask me.

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Customer: replied 5 years ago.
I lost my job in 2008 and now make half of what I use to so I had to hit my retirment account to pay bills. Like I said it just keeps going on cause I keep borrowing to pay taxes. Do you think I should see a tax attorney?
Expert:  CGCPA replied 5 years ago.
I would recommend a CPA. You can ask friends, family or coworkers for a referral so that you start with some degree of trust in the professional. I recommend seeing a CPA because taxes are not the only thing we deal with and we tend to charge less than an attorney for our time. You may need to restructure life quite a bit and a CPA can serve as an ongoing guide. It is one of the things we do, not just taxes.
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