IRS and State Taxes Incurred Once You File

[minan]

What happens if you file 13 and get on a payment plan in 2010, then you find out at tax time in April 2011 that you owe taxes on state and federal?

I'm struggling with this because I am currently self-employed and am paying what I can towards my estimated taxes. I expect to become an employee starting in July so basically half of 2010, I will be a 1099 and the other half I'll be a W2.

I am trying to determine all the business expenses I can claim by poring over line by line every bank statement from Jan to June. I am also trying to estimate my deductions (I have a mortgage) so I can determine what will be my AGI.

When I go W2, I plan to claim 0 so the max is taken out by state and federal.

As anyone incurred additional taxes during a chapter 13?

The reason I'm thinking about a 13 is that I'm way over the median and am trying to deal with IRS/State back taxes.

Any help would be greatly appreciated.

[lrprn]

I regret to say that any new debt (taxes, medical bills, etc) that occur even one day after filing must be paid by you. New debt cannot be retroactively added into your plan.....however, you do have options for how to handle this situation.

If the debt is more than you can pay from your emergency fund, your attorney can contact your trustee to see if an arrangement can be made to skip a Ch 13 payment or two to pay the new debt, then start payments up again. Your trustee may also give permission to set up a payment plan as well.

If the new debt is considerable and long-lasting, your plan can be amended to show the increase in your expenses, the possible decrease in your DMI (unless your income has increased signficantly since filing as well), and possibly lower your Ch 13 payment so you can now pay on the new debt and keep your 13 active as well. However, some Ch 13 lawyers may ask for more money beyond their fee to amend your plan.

[minan]

Is there ever an end in sight? I'm afraid I don't see the light at the end of the tunnel. Going self-employed was the biggest mistake I ever made. I didn't realize everything that was entailed and just kept getting further behind. Now I'm trying to do the right thing and I can't seem to get ahead even one step.

This last month has been the most demoralizing, taken any self-esteem I had away. I'm never felt so much like s..t like I do now. Every time I feel like I've taken a step forward, something happens that takes me back 5 steps.

[lrprn]

Is there ever an end in sight? ... Every time I feel like I've taken a step forward, something happens that takes me back 5 steps.

You are at the worst stage of figuring out if bankruptcy is the best answer to your problems. You are overwhelmed with the realization that you really are painted into a corner without many alternatives, and blaming yourself for manning the paintbrush. That's where bankruptcy comes in. It really can be your fresh start where what is going on now just becomes a bad memory.

Make a face-to-face appointment with your lawyer asap. Talk over everything you've told us and find out what's going to fly in your district and with your trustee. Get the facts so you can make good decisions how to proceed from here. Focus on the end point, not on the starting point - that's the ticket. Keep your eye on the prize - your fresh start - and accept doing whatever you have to do to get there.

Hang in there. The emotions run high before filing, and it's really tough to keep things in perspective when you're trying to sort out all the specific issues in your case. We're here for you - you aren't alone. Keep posting - we'll help you sort things out as best we can.

[star26]

We owed 2009 Fed taxes and couldn't pay them. I sent a copy of our taxes to our attorney. I never heard anything back from the office but according to the Ch 13 site that I check every week the Trustee is now paying them. They were added to our creditors and all the money of my May payment except for the Trustee's part went to the IRS. I am assuming this will happen until it is paid off which will be in Aug.