I.R.S.= I'm Really Stupid and It's Really Sucky
Yep, we owe the government. Not for last year, but for a few years back. We received the notice that items were misreported on our 2004 Tax Return and that we had 30 days to review the IRS findings and respond to their notice.
Well, indeed we do owe the money, with penalties and with interest. I'm not sure exactly how the mistakes came about but our federal withholding taxes were way wrong on our return. Now we owe $5,900. That's a huge amount from a one-line mistake!!!!
We don't want the IRS debt hanging around for long because the interest and penalties continue to accrue daily until paid plus they have real power to basically do anything they want to get their money. Here's our plan to get it paid off by May 31st.
1. They will keep our $2100 economic incentive check. New balance $3800.
2. Our entire $1300 debt snowball for April 30th will go to the balance. New balance $2500
3. On May 15th we will pay $500. New Balance $2000
4. Our entire $1300 debt snowball for May 31st will go to the balance. New balance $700
The remaining balance of $700 is the part that is the challenge. I've got to find $700 in snowflake money to make up this difference or we will have to wipe our most of the emergency fund. Snowflake money can come from not spending the entire budget in other areas such as the electric bill, gasoline for cars, and any misc. spending that usually goes on during the month. Snowflake money can also come from making extra money such as having a yard sale, selling on Craigslist, making money from this blog, rebate checks, etc.
So, if you had to raise an extra $700 in 5 weeks what would you do?
Tuesday, April 22, 2008
We Interrupt this Debt Repayment Plan to pay the IRS
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27 frugal-minded friends say:
If it were me, I would seriously have to consider doing absolutely nothing for the next month, sell stuff of Ebay & Craigslist, try & find some extra work (even if it's babysitting), & most importantly pray.
If you don't mind me asking, how much are the pentalities & interest on something like this? Did they charge you per year?
Ouch. I'm sorry. :(
What about selling some things on Craigslist? That might help a little... I'll let you know if I come up with any other ideas. I'll also say a quick prayer for you.
OUCH!!! Have you ever thought of doing surveys? I know it doesn't add up real fast, but at least it can help with some small things! I have a list on my blog that I've been using for a while and love! And, of course, craigslist or ebay too.
OOOO! I'm really sorry about this! If I had to come up with some cash, I would first sell things on eBay. Then I would schedule a yard sale. I would also look through the cabinets and use all the cans of stuff that's been laying around to save $ on groceries. If I was really desperate I would cancel the satellite TV and internet for a few months. Those are things we can do without. Good luck!
btw, I love this blog! I would probably check on whatever services you have (phone, internet, etc) and shop around. I did this when I lost my job and switched my internet from Comcast to AT&T, they paid me $275 in three different rebates to do it.. I love my service better and it got me some extra money! I also would maybe take off call waiting/ID *I know it's hard!*, cancel my cable/Internet and maybe just watch DVDs or spend more time together outdoors. I have some freebies for planting if you're interested write me! Also, maybe try CashCrate, it's legit and I got a free Blockbuster & Netflix trial so I got tons of rentals to make up for no cable.. Try a legit survey company, I have a few, first try this one:
http://cashcrate.com/552762
Yes, it does include my referral link, but I'm trying to do this to make our way during the month long no income thing that we're going to have to rock until my husband's Air Force pay begins.
If you have any questions or want the links, write me.. sk8trmusicmoma (at) gmail . com
$700 in 5 weeks? Now, that is a good question. I would definitely get down to a bare bones budget. See if there is anything you can cut back on.
As a teacher, I wonder if you could get some extra tutoring in. I have done this in the past and made anywhere from $15-$30 per hour.
Before I would do anything if I were you I would consult with a tax attorney. Seriously we had something similiar happen to us and we ended up not even oweing a quarter of what they said we did. Usually an attorney can get the IRS to waive all penalties and interest which will probably cut your bill in half at least. The attorney fee for us was less then $300 which was totally worth paying. The IRS said we owed something like $10,000 and we only ended up paying about $2500. Something to think about anyway....
BTW I also love your blog!
I second consulting with a lawyer.
I'm so sorry to hear about this! Dave Ramsay would suggest delivering pizzas or getting some other part time job until you could pay this off.
I think having a yard sale might also bring in some quick cash...especially if you haven't had one in a while and have a lot of things to sell.
Good luck!
If I remember right your husband is already working a second job- right? and you are a new mommy. Why is it always at such hard times- bless your heart. God is bigger and you can work through this! We just went through 15 months of two house payments that left us with $600 a month for food, utilities, and everything else. I stretched our food budget by lowering the meat content. I would make spaghetti with 3/4 lb meat to two jars of sauce. I made a lot of rice and pasta dishes where I could stretch things. I added beans to tacos and everything else that I could throw them in. We had no meals where everyone got a portion of meat. Put Greek seasoning on chicken and grill or bake, or do a whole chicken in a crock pot and pull off the meat. Use this meat over salad, rice, pasta, in roll ups, quesadillas, fajita pizza, chicken salad sandwiches, add to soups or casseroles. I just did not buy anything for the house or clothing or anything that I did not have to. We would go to Sams on Saturdays to get out of the house and make a good snack eating all the samples. Entertainment was free library books and videos, trips to the park, finding hiking trails, ball, cards and board games, puzzles, church activities. Gather whatever you can to sell- every little bit helps. If you go to a pot luck or anything like that offer to clean up and sometimes you get leftovers to take home. Pray. Offer to babysit. Advertise that you are having a mom's night/parents night out on a weekend night and accept 6 kids or whatever, cost is $5 an hour. Tutor. Hang clothes to dry. Bulk cook so you use less oven costs. Use your crock pot to cook up beans and have ready in the freezer. Use things you have to make crafts to sell. Start plants to sell. We delivered papers for 6 years. I could take the kids with me although I had to get them up at 3:30- they then slept in the car. I don't think that would work if you are working and hubby is working because you have to sleep sometime, but we did make bring home $2300 a month for 3 routes. Combine all the trips you can to save gas.
Hang on to the fact that this is something God is allowing for you to grow to trust Him for provisions and He has promised to take care of our physical needs if we trust in Him. I really know the feelings you are going through and am so sorry. Can't wait to hear your victory cry!
I'm so sorry! Don't get discouraged and don't give up on your debt snowball!! I second the ebay and craigslist options. Or could you pull off a yard sale one weekend? I did cash4gold.com once and got a check for about $100 from all my old broken chains and single earrings that we missing the matching one, etc. They seemed to be legit and gave me an itemized receipt with what everything was worth. Also, we'll all click on all your ads like crazy! haha. You can do it!!! =)
If nothing else, consult an attorney first. Most will tell you if it is to your advantage to use them during a free consultation.
Last year I got a $24,000.00 tax bill from the state for the tax year 2004. When all was said and done, they sent me a check for $400
Good luck!!
Yuck! I'm so sorry to hear this.
$700- hmmm.... I'd start with a garage sale/ebay. I'm selling all of my surplus CVS stuff this weekend at a yard sale. I'll let you know how that goes. I bet in the next 4 weeks you could stockpile quite a bit of CVS/Walgreens stuff to sell if you don't already have some.
Online surveys I hear pays if you are not doing that already.
A babysitting open house. Say, Fridays from 6-9pm or Saturdays people could drop off their kids at your house for a set amount of time and money. You and your husband could do it together and it wouldn't take away from family time. A movie, a few games, some popcorn... could be a money maker.
I'll keep thinking. Keep your chin up. You can do this and I know you'll be amazed at how God will provide!!
I second getting a second opinion before paying a dime!!
Ugh, we realized we had made mistakes on previous returns and I had to file 7 amended returns and pay almost $1500 in back taxes. I think I will be getting fined from the IRS as well, just waiting on it. I am sorry! Anyway, I would have a garage sale or sell stuff on Craigslist. Also, eat from your pantry and put anything extra out of the budget towards this. Good luck!
Have a yard sale, and purge all your higher ticket items you no longer use on ebay or craigslist.
Can you tutor?
By the way, TAG YOU'RE IT!
http://free2befrugal.blogspot.com/2008/04/tagged-again.html
:)
Gosh Angie, I'm so sorry! You've got some great readers leaving great comments though! The only thing I can think of that they haven't covered is cutting out the dance for 2months and I hate to even write this for everyone to read but...depending on the penilties, would it be less expensive to take money out on a cc to pay the IRS? Just a thought, don't shoot me!
Also, here's another GPT site that I'm having luck with
http://rainingriches.com/members/register.php?ref=astikeet
They are having some contests going on this weekend that you could get in on. I know you are doing cashcrate too so this one can bring a little more. They have some different offers.
If you have a garage sale let me know and I will donate some stuff, not junk. I never have enough to have my own yard sale and I have some things like candle holders and such.
Most important of all is prayer! Just like "southern" said, God is allowing this for a reason. Trust in Him.
I'd have a garage sale and go bare bones with grocery shopping, eliminate car trips to save on gas. I also agree about canceling luxury utilities, just temporarily...if I had to.
~Becky
OUCH!! I agree that you should consult an attorney before paying...After that, I'd seriously look at ways to cut back on your utility bills. Turning off lights, line-drying your clothes, turning the air off when you leave the house and turning it up to 70 or 72 when you are home, cutting back on lawn watering, showering etc can really make a difference.
Also, if you have any monthly subscriptions - Netflix, Sirius radio etc it might be the time to cancel or see if they can suspend your account for a few months.
HTH!
Oh man! It seems they really got you before the statute of limitations ran out on this one. You checked into this right? The IRS is required to assess tax within 3 (three) years after the return was filed, unless you never filed a return or you misreported in excess of 25%.
As to how to come up with the $700 I am with the reader that suggested a bare bones budget to come up with most of the money and a yard sale or craigslist for the rest.
I am sorry about this!
Mercedes
The hit us up this week too. I had to take money out of savings to pay for it. I was going to use the money as a cushion in case I had to send my son back to private school from home school after we add number 3 in a couple months. Now I have just about enough for next years curriculum. My husbands response was "guess God is telling us he needs to stay home again." Oh well. I think its easier with him home since I'll have 2 special needs toddlers that have to have therapy 3-4 times a week.
Thankfully your tax rebate ate a portion of what you owed.
Also it my understanding that you only have to pay penalies on the unpaid balance so that wouldn't be too bad.
Holy cow! That totally sucks!
I admire your grit, though. You've already got a plan - that is a great start. Keep on truckin. You are an encouragement to all of us.
Thanks everyone for the encouragement and suggestions. We did get everything checked over by a tax accountant (not a lawyer though) and it is really what we owe. I do believe this is just test that God has given us and that we will be so much stronger after we meet this challenge. Apparently a lot of people have payment plans with the IRS but we want it gone. Even Dave says to do whatever you have to do to get the KGB, as he calls them, out of your life. I will update as we progress. Again, thanks for everything!
hey, can you bake?
anything...
cakes, pies, cookies? maybe you can have bake sales in conjunction with your yard sales.
if your goodies are tasty, you might even get some regular customers.
pull out some old family recipes or a favorite cookbook and get cooking! :-)
good luck and God bless!
Wow, sorry to hear about this. I don't have any other suggestions. Everyone already covered it all. =)
Owww! I am so impressed with your plan to knock it out. I think the lawyer idea is a good one!
Hate to hear this Angie, but I know God will open a door for you to make this extra money. There have been so many good ideas here...I clicked on some of your ads too to help add a little money to your change bucket =)
Ouch! I'm so sorry this has come up! Even without contacting an attorney, can you try negotiating with the IRS? Maybe even tell them you can pay $5200 and ask if they can waive $700 worth of penalties and interest?
Also, I would do all of the things you mentioned. Spend less and sell stuff, especially, since that's money you don't have to wait for. I've been working to adopt Meredith's cheerful frugality outlook, so in that spirit, you could look at this as a chance to really purge your house of things you no longer use or need.
Again, I'm sorry you're going through this, and I wish you much luck in disposing of this problem quickly!
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