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

Resolved Question:

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: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.

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.,,id=108347,00.html

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