Okay, once again I owe the government money.  (how we can make not enought
to live on and still owe the government is beyond me.)  This time it is close
to forcing me into bankruptcy.  Does anybody know :

A.  What the proceedure is to pay the feds if you don't have the money to pay
them and cannot borrow any money.

B.  a good credit counciling agency.

144 responses total.

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Are you a member of the UM Credit Union, bru?  They have a deal with a
financial counseling service: first hit is free.  I've got their card
somewhere, but I didn't put them in my addressbook, so I'll have to find the
address later.

Friends of mine who have faced the problem of large IRS bills and
small incomes have found that the IRS is quite accomodating.

And as I recall personal bankruptcy doesn't eliminate IRS debts.
And do contact the IRS, like any organized crime outfit their 
goal is to keep you in the system not force you out of it.

What I've heard agrees with what Larry and Brian said.  The IRS will be
willing to work with you on it.

#4> I wouldn't be surprised. Student loans are exempt. The government is very
willing to erase your debts with other people, they're just not all that keen
on letting you erase your debts with them. ;} But they ARE very willing to
just start charging you interest, so long as you tell them you can't pay just
yet (you can put off student loans for as much as a year without any good
reason, and longer for things like maternity leave, health problems, and
extended unemployment).

If you're a member of the U-M Credit Union, their WWW page is 
http://www.umcu.org.  The link to their budget counseling service is 
http://www.umcu.org/fintools/budget.html.  Their service is linked to 
First of Washtenaw, phone 663-7900.  My wife went to them before we 
were married, and spoke highly to me of Kathryn Greiner, early in our 
marriage.

If you're not a member of the U-M Credit Union, is their WWW page something
else? ;}

No, but their services may not be available to you and so you might 
want to disregard the link.  (-:

Three of my translator colleagues reached agreements with the IRS to gradually
pay off their debts.  One of them was mad because the IRS required her to cash
out her mutual fund to pay them.  I am mad because she would not do so to
repay me a loan which it looks like she will never repay.  She keeps buying
new computers.

If the situation is hopeless, and your current assets and income are tiny
compared to the tax liability, the IRS will put you in what they call
"non-collection status."

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#12> You may want to read your promisory notes closer. My loans were through
Sallie Mae, but they're exempt from bankruptcy.

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The advice I've heard is that if you intend to pay, you should talk to 
the IRS -- they'll work out a payment plan with you at a fairly low 
interest rate.  If you *don't* intend to pay, pay your taxes with a 
credit card.  The IRS can come after you in a lot more ways than the 
credit card company can.

That presumes you have a credit card. >=}

Re 15.  Agreed on all counts.  The IRS has been known to require people to
max out credit cards to pay their taxes.  That sounds brutal, but as you
say, it actually leaves a debtor in better shape legally.  For example,
bankruptcy can erase credit card debt. 

On the other hand, the IRS is probably more patient and reasonable about
setting up payment plans than any credit card issuer or private-sector
collection agency would be.

Right, and the interest rates will likely be lower from the IRS than 
from any credit card issuer.

Not necessarily.  Their rates are pretty high.

And this is where Rhiannon needs to do her part for the family.

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I had a feeling that was going to come up from the source.

Spoke with the IRS and they said they are willing to set up a payment plan
over several years.

I was in this situation when my first wife gave me the heave-ho.  My
exemptions had been figured for a family and when I was suddenly single, not
nearly enough was withheld.

So, I waited to file to the legal limit (give or take a day) for extra time
to come up with the tax I owed.  My filing was filled out so that the IRS
would compute the tax itself.  After two months or so, I received a bill from
the IRS and the deadline for paying the bill had another few weeks added to
the length of time that I had for saving up the tax.

I'm curious; my wife and I will be divorced by the end of the year.  
How does that work for taxes?  Do they pro-rate the tax rate so we pay 
one rate until the divorce is finalized, then the other rate?  Do we 
pay as singles, or as married, for the whole year?  I should probably 
find out, as I may not be having the right amount withheld at this 
point.

I haven't bothered to read the rest of this item because I'm generally lazy.

HOWEVER, two years ago we ended up owing over $4000 to the Feds, and Adrienne
and I couldn't come up with the money.

The IRS will allow you to go on a payment plan as long as your payments:

#1 - pay off the debt in 3 years or less
#2 - you are not already on a payment plan

There may be some other requirements as well, but it was pretty simple. 
There's a form you fill out but I'm not sure what form it is.

Ask a tax advisor.

Re 26.  I don't think that 3-year rule is ironclad, but it probably
depends on the circumstances.  They do consider what is realistic given a
person's income.

Jep, I am pretty sure that until the divorce is finalized, you guys 
will be filing as married. Now, that could be bad for you if you have 
to file on your own but still married. It depends on Andrea's income. 
What you can do to give yourself an idea is go get some tax forms and 
fill them out as if you werent filing jointly and see if you owe or 
not. Next year's taxes are likely to be similar. 

I always do my taxes as soon as possible.  I ended up paying a few years
back and it was painful.  This way you can know what you owe as soon as
possible.

Paying the feds $1k with a few days notice when that's all you have for the
next 4+ weeks makes it interesting to live.

I expect that your tax payments are based on your marital status on Dec 31.
John might save some tax money by delaying the divorce until January if Andrea
is not working much, but then they would have to come to some agreement on
who got any refunds.

I don't think Andrea is going to put up with the divorce being delayed 
until January.

We got an (unexpected) refund this year, and have provisionally worked 
out a way to handle it; the check will come addressed to us both so 
we'll sign it at the credit union and ask them to give us each our 
half.  We could deal with that again next year if necessary.

Yep, I looked up the instructions for 1040A at www.irs.gov, and it says 
your marital status is as of Dec 31.

There used to be a tax dodge that I seem to recall involved flying to
a carribean island late december, getting divorced there prior to the
31st, and then getting remarried before leaving the first week(s) in
january.  I don't recall the details of why that was a good thing from
the tax standpoint...

Just spent a 4 hour marathon session doing the taxes and we're gonna
file an extension anyway (as usual).  Noticed that this year the
exemption for mary wilson has mysteriously disappeared (apparently the
more you make the less you can deduct of it until it quickly becomes 0).
The 'marriage penalty' doesn't appear to be as bad - this years version
of the tax program we use actually has an entire section devoted to 
a side by side comparison of married filing singly -vs- jointly. No
longer will she be refered to as 'our little tax deduction' Other
things that were formerly 'pretax' are now showing up, sigh.

The IRS recently released data for tax year 1999 - how interesting 
that they are so far behind...Crunching the numbers one finds such
interesting datum as '2% of the population pays 90% of the taxes' -
which I guess is as it was supposed to be when the current IRS thingy
was enacted in 1913 - although under the original plan, only the top
2% 'earner' paid any taxes at all, the rest of the 98% of the 
population paid no income tax at all.

More and more I am in favor of a flat tax across the board with
no deductions - everybody pays their fair share.  More and more
I am become convinced that the current tax situation is fundamentally
flawed as it doesn't treat each citizen equally.

Oh, by the way, filing an extension doesn't mean that we don't have to
pay taxes, we do - you have to send money with the extension of what
you think your taxes are.  It just means that we have more unproductive
time to waste over the next months crunching numbers to try to reduce
the tax bite and try to get some money 'back'- applied to next year.

It is interesting to note that the illegal drug 'industry' - which at
least involves production and consumption of a tangible product - is
is still less than the 'tax preparation' industry in terms of total
'revenue'.  H&R Block spends orders of magnitude more than either
the NRA or 'the oil companies' in 'lobbying' in DC each and every year.
 

jep, your W-2 withholding amount can be changed to anything you want.  I
had them withhold extra money last year while I was married so that I would
not be underwithheld when I was taxed as a single person.  If you do it
now, the extra amount each month won't be much.  Waiting until June, or
August, or whatever just makes the $s you have to make up that much more
per month.

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Is it the habit of so many people to spend *every last dime* they get in
paychecks the instant they get it?

No, I think most people spend it a long time BEFORE they get it.
I bet bdh would not be in favor of a flat tax if he were in the 15% bracket
and it suddenly became a 25% bracket.

Yes I would.  I like fairness.  I like equality.  The current tax
structure is neither equal nor fair.

If I was making enough to save money, I would.  Yes, we live basically
paycheck to paycheck.  It isn't fun, but what choice do we have.

- Backtalk version 1.3.30 - Copyright 1996-2006, Jan Wolter and Steve Weiss