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I am 56 and 1/2 years of age and owe both the Federal and Missouri

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governments back taxes for the...
I am 56 and 1/2 years of age and owe both the Federal and Missouri governments back taxes for the year 2008. Can I withdraw money from my IRA to pay these taxes without being subject to the 10% penalty for early withdrawal, as I have no other possible funds for paying them? Also, the IRS told me they would not establish a monthly payment plan for the back taxes until the amount I owe is less than $25,000. Is that true or just the answer of the one rep I spoke with?
Submitted: 8 years ago.Category: Tax
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Answered in 6 minutes by:
8/3/2009
Tax Professional: Merlo, Accountant replied 8 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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HelloCustomer

If you withdraw funds from your IRA account to help pay off these tax bills, your withdrawals will still be subject to the 10% early withdrawal penalty unless the IRS has actually placed a levy on your IRA account. If the IRS has placed a levy on that account, then the withdrawals you make to pay off the tax bill would not be subject to the 10% penalty.

As far as payment plans on more than $25,000 in combined tax, penalties, and interest, you may still qualify for an installment agreement, but a Collection Information Statement, Form 433F (PDF) may need to be completed. Call the number on the bill or mail the Request for Installment Agreement, Form 9465 (PDF) and Form 433F (PDF) to the address on the bill.

Here is a link to the IRS web page that talks more about Installment Agreements.

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

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

Thank youCustomer




Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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