I'M Nervous Please help me!!!!?

Question

I recently took the buyout from my job it is 4 $85000.00. My question is i new that i owed the irs $12257.00 for 2004. Today i received a paper from the irs it said that i owed $17000.00 totaling $29000.00 I was stunned this all came from my tax preparer being audited now becuz of what she did and i swear i didn't know my fault for trusting her i'm stuck paying money back along with late fees that are ridiculous. anyway my question is will they take the taxes that i owe out of my buyout money? if answer is yes how can i stop it i have 2 kids we llive in michigan and i'm going to school 4 nursing don't want them to take all my money please help.

Answer 1

You stated that you are aware the money you owe IRS for 2004.  Then stop thinking your tax preparer have anything to do with the outcome.  IRS is keeping a running tab of the taxes you owe plus interest and penalty.  Whether you have been filing taxes since 2004 is immaterial, IRS has all the information they need to keep your tab running.

The money you owe IRS since 2004 was accumulating interest and penalty since April 16 of 2005 regardless of whatever the IRS is doing with your tax preparer.  In fact, one could argue that you should thank your tax preparer for having her audit and thus triggered IRS to write the letter.  Because IRS was charging and accumulating interest and penalty whether they tell you about it or not.  At least you are aware of the situation now rather than when your debt to IRS is few times bigger.

It is likely that IRS will initiate a wage garnishment and take some of that money, but they will not take the whole thing.  

As for actions you can take at this time:

1.  If you haven't file 2007 return, you should do it now.  Filing is the only way to qualify for tax rebate.  Even though you wouldn't get any money because you already owe, at least you get the rebate to pay toward your existing back taxes.

2.  Talk to your local IRS office and get a better understanding of how you came to owe the current amount.  They will have the break-down of what you owe each year in taxes and what amounts from interest and penalty.  Go to http://www.irs.gov/localcontacts/index.h... to find the closest office.

3.  If you have access to a loan that charges lower interest than IRS, then you could consider borrowing the money and pay back IRS.  As you can see, the amount you owed in 2004 doubled in 3 years, IRS's interest rate and penalty is quiet steep.  

4.  If you are not able to pay back with a loan, then work out a payment plan with IRS.  This will not change the amount you owe nor any future interest and penalty charges, but will help you prevent any future wages from being garnished.  Go to http://www.irs.gov/businesses/small/arti... for more information about setting up a payment plan.

I know the reality is cruel and no one had told you what can happen with the back taxes.  The best thing to do now is to find a way to move forward rather than fighting with facts that you can't change or placing blames.

Feel free to contact me directly if you have more questions.

Best wishes.