Owe IRS during active 13

[ruspider]

Our cpa just informed us that we owe the IRS 3,000 for tax year 2006.
We are 18 months into a 42 month plan.(Husband filed alone)
Last year we recieved a 4,200 refund from the IRS(which we kept) so we tried to tweek /adjust our withholding.
2006 brought us increased salary which bumped us into a higher earning bracket and we lost several thousand in college deductions.
So we owe the IRS about 3K and can pay it.
Does anyone see a problem with this situtation?
Our 13 has been going along smoothly so far.
Thanks in advance.
Ru

[lrprn]

So we owe the IRS about 3K and can pay it.
Does anyone see a problem with this situtation?
Our 13 has been going along smoothly so far.

Ruspider, did you mean to say that you *can* afford to pay the $3K to the IRS? Or did you intend to say that you *can't* pay the $3K?

If you can afford to pay the $3K, I'd like to know your secrets for being able to amass that much while in Ch 13 - please share! However, if you can't pay the $3K, then you can work with your lawyer to file an amended plan that includes allowing you to pay the $3K to the IRS.

For this coming year, keep an eye on your exemptions using the IRS Withholding Calculator at http://www.irs.gov/individuals/artic...=96196,00.html . You can adjust your withholdings throughout the year as necessary to ensure this doesn't happen to you again.

[SinkingFast]

If you can afford to pay the $3K, I'd like to know your secrets for being able to amass that much while in Ch 13 - please share!

Me Too!!

We have auto insurance coming. We pretty well had the money for that set aside when Hubby's truck needed a new fuel pump. $750 gone! Poof! Just like that!

I'll take any savings secrets you have to share!!

[Ch7Ted]

You may have to workout a payment plan with the IRS which would be separate from the Ch 13 payments. Your lawyer can't do a thing to modify the plan to account for the IRS other than charge you extra money for filing the paperwork needed to modify the plan.

I owed $700 in back taxes from 2005 and I worked out a successful two payment plan with the IRS. I think the IRS will give you up to 12 installments; More information can be found on the IRS website. I'm in the same boat with VA: I worked out a 12 months installment plan for $3,700 in back state taxes. The tax man is exempt from bankruptcy for a reason.

[lrprn]

Your lawyer can't do a thing to modify the plan to account for the IRS other than charge you extra money for filing the paperwork needed to modify the plan.

Ch7Ted, do you understand how Ch 13 works? In Ch 13, there is NO EXTRA DISPOSABLE INCOME left over every month to pay these new taxes.

Even if the IRS gave ruspider 12 months to pay off the $3K that will be owed, that's $250 extra to come up with every month for a year. It would be a very unusual (and very lucky!) Ch 13 filer that has that much extra left over in their budget every month consistently over a year.

Yes, ruspider's lawyer will charge extra to amend their Ch 13 plan, but it's 95% likely that there's no other way to pay the IRS and still keep up with his/her monthly trustee payments, any payments made outside the plan, plus living expenses as well.

[ruspider]

Last year we recieved a 4,200 refund from the IRS(which we kept)
Ru

Thanks for the replies.
As you can see, we recieved over $4K in refunds in 06 , and we are good savers.(now) Yes, we can pay the IRS. Also , he gets a lump sum bonus March 1 which helps.
Most of his salary comes from commissions. and 06 was better than 05(when we filed) which I'm so thankful for. The loss of the college credit (which apparently goes down when your income increases) was a big factor.

Not to say it hasn't been tough. It has. We have little for extras and some months are worse/better than others. Chp 13 in a sad sort of way has been a blessing for us.

Our attorney is expensive and if we don't need to contact him about this , then I certainly won't.

We don't want the plan to be ammended. We just want to pay what we owe and this year check the irs calculator quarterly and adjust that way.

Thanks
Ru

[BlessedOne]

In our case, we owed for 2005 and 2006 taxes. We filed in Aug. 2004 but we did not amend our plan until last month to include both years taxes. The IRS contacted us to try and work out a payment plan but there is apparently some law that says they cannot enter into a pay agreement with you while in a chp 13. They told us they would file a claim to be added to our plan and if the trustee objected, we would have to pay once we were out of the bankruptcy. Keep in mind, this only applies to prior year taxes. One thing that was a benefit to us was once the taxes were included in the BK, the IRS waived all interest and penalties.

Our trustee did approve the claim and raised our plan payment another $400 a month.

[Anastasia]

I may be of some assistance here since I recently had a "chat" with the IRS myself. First of all I want to say that when I filed Chapter 13 in 2005, we added in the Federal taxes we owed for 2003 and 2004. I kept getting bills from the IRS and called them. I told them they were incorporated into our plan and after checking, they found out that they had not sent back a claim and in their words, "it was my lucky day...they would have to eat those 2 years." Now, that is very rare and I did get lucky.

Now for the matter at hand. While on that same phone call, I wanted to discuss the installment schedule I had in place for my 2005 federal taxes owed. After discovering I was in bankruptcy, I was told that they really couldn't even be talking to me about that debt, even though it was after I filed, and that they had to cancel the installment agreement also. When I asked what was I supposed to do about paying 2005 I was told that I would just have to pay it whenever I could and they could not contact me about it. But I'm sure that once my case is discharged they will be at me full force. I was very surprised by all of this. It went against what I thought the outcome would be. I'll just have to send in installments on my own without any "contract" with them.

[quietsound]

So is there anyone here who owes this year that has been in the plan and really knows what the story is. I may owe taxes for 2006 and I just had my trustee meeting too. So the irs won't do a payment plan for you then?

[rrockinggramma]

The IRS will not set up any payment arrangements while in a chapter 13 but you don't need them. Just pay them. I owed last year and I paid when I could. There was no penalty or interest attached to my owing. And I couldn't pay my measly 105.00 until August, but I finally was able to scrap enough up to get it done. This year I owe 49.00. I will pay that when I file electronically with my debit card. So just pay it. I had to send in copies of my taxes however to the trustee. If you are not required to do that, then good for you. If you are however, staff attorney's do look them over. They are looking for a refund of course, but the fact that your income is higher my affect your plan. The trustee may request a modification etc. unless you are already paying in at 100 percent. Good luck to you.

[quietsound]

So what your saying to me is that IF I owe for 2006 the IRS can't collect off this until after the bankruptcy unless they file a claim for it?

[rrockinggramma]

yes that is correct. So even if you can't pay off the whole balance, try to pay something. But they are not going to touch you until after discharge. And the IRS never filed another claim in my case. They were just waiting for me to pay it.

[ruspider]

Sorry, I posted this quote in the wrong thread




Originally Posted by klux
SAme thing happened to us this year. My suggestion is to pay it up front and don't tell the Trustee. I contacted the IRS Insolvency branch like indicated on one of the IRS extension forms and they said that they would file a post petition claim and that the chapter 13 plan would then pay the taxes, NOT TRUE! Two days after this conversation with the IRS I received a letter from my truestee, it was a MOTION FOR DISMISSAL FOR FAILURE TO PAY POST PETITION TAXES, they consider it a new debt. I had 21 days to object to the motion for dimsissal and the only way I got out of it was to pay teh IRS in full before that 21 days was up. HOpe this helps.

[quietsound]

you know what, I have a very good lawyer and I wonder if this could help me in the end IF for some reason I actual "owe" taxes for 2006. Listed as income is of course our regular income but there is also other monthly income and in that column he took our refund that we got last year and divided it by 12 and claimed that as income. meaning so that we can keep refunds in future, he included an additional $250 a month so we can keep up to $3k in tax refund.................SO with that said, if this year we don't get a refund what happens to the $250 that's been added in as income for this refund?

DID i just confuse everyone? If I do my taxes and the refund is under $3k I can keep that refund because I had that added already as income.........so what happens IF instead of getting refund, i owe? Anyone have any answers for this?

[lrprn]

If I do my taxes and the refund is under $3k I can keep that refund because I had that added already as income.........so what happens IF instead of getting refund, i owe? Anyone have any answers for this?

If you end up owing taxes, then I'm thinking you will be responsible for paying them. Of course, I'm not a lawyer or an accountant. You will want to run this by yours to see exactly where you stand. Come back and let us know what you find out, ok?