Taxes question - Owe on 2008 Fed return

[jj26]

I just did a preliminary entry of my 2008 federal taxes and am going to owe approximately 10k in taxes due to a loan I had on a 401k that was closed out last year. I haven't filed the taxes yet and am considering filing CH. 7 very soon.

If someone has experience in this department, what is the best option to handle this? Is it better to file Ch. 7 first and then submit the Federal return, or to file the Federal return and then file for Ch. 7?

[DaisysMom]

I am in the same boat, except I only owe because I am self employed and didn't pay enough last year.

I usually file for the extension, but my attorney told me that in order to file Chap. 7 in Ohio, all taxes must be filed. And if I owe, I have to be in some kind of payment plan to pay them off that I can show the BK court.

I don't know if that is the way it is for all States, but he said that was a law in Ohio.

D...

[StartingOver08]

Yes you have to file first. The amount you owe is put on the petition. You can be in a payment agreement with the IRS, but they will not do any collections during the auto stay period (the IRS). After you are discharged, you have to contact the IRS again to either continue the payment plan or modify your plan. When I filed, I made an agreement with the local IRS office just prior to filing (same day). I told them I was filing - they gave me a very, very low payment to pay over 5 yrs. You are allowed to pay the IRS more as you are able to

[jj26]

StartingOver08: So if I apply for a payment agreement, do I have to wait for the IRS response and payment plan before filing? And if I filed my taxes tomorrow electronically, would I be able to go to a local IRS office to make an agreement that same day? If you could supply as much detail or steps about what you did, that would be appreciated. I would like to file next Monday for Ch. 7 if possible.

Did you tell the local IRS that you were filing CH7 as well? Or did you leave that part out?

[StartingOver08]

I went to the local office and paid in the morning a lump sum and had a remainer amount due to the IRS. I explained I was filing for Ch 7 and was insolvent, so the payments are very low (essentially the outstanding balance divided by 60). Yes, the agreement needed to be forwarded to a central office for approval. NO, you do not wait to file BK until the agreement comes back. Yes, I supplied a copy of the agreement to my attorney and he put the remainer amount on my petition as the priority debt. The easiest way is to do it at your local office. The IRS is actually really cooperative when you come in to make the agreement. Nothing to fear

[Tromploi]

Here's what we did. When we filed Jan 2008 we were in a payment plan with the IRS for $450/mo for 2007 taxes. We told our atty we were going to owe about the same for 2008 taxes ($25K or so) due to not paying estimated quarterlies like we should have. The trustee asked at the 341 about 2008 taxes and when they would be done, I said uhh October? I told him we would owe alot because we didn't pay quarterlies and he said okay. That was it. We have been making the payments throughout the stay to the IRS, and did not tell them we were filing BK, not trying to be secretive just didn't tell them. WHEN we do our 2008 taxes and need to make payment arrangements for that I will tell them, see if they can keep it as low as possible.