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I am in tax hell

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    #1

    I am in tax hell

    Our lawyer strongly advised us to pay our nanny taxes for 2006 so that everything will be squeaky clean when we file in February 2007. We were being dilletantish and hadn't set up any tax filings with the state or the federal government.

    The federal taxes will be easy to do, since they can be paid on our tax return (schedule H). However, since we haven't been withholding SSA or medicare taxes from the nanny's checks, we will have to pay ALL of the taxes for 2006! It comes to 15.3% of what we paid her last year.

    Then on schedule H they ask about state unemployment taxes as well (ie you HAVE to have a state unemployment tax ID and an EIN to file). Now state unemployment taxes should have been filed for each quarter, which we didn't do. So, I went to the website and noticed that there is an option to pay annually. A mail in form is due... December 31. So now we're going to have to pay late fees for the state unemployment taxes in addition to the federal taxes.

    This is so aggravating. I now wish we had just planned on doing this from the get go, but the nanny didn't want to and we didn't have a lot of extra money to sink into it. Now we're screwed.

    Dumb bankruptcy. Stupid taxes. Stupid shift work which required a nanny in the first place.

    OK, rant over!
    Lisa C.
    Filing BK due to business insolvency.
    Tags: None
    #2
    I feel your pain, LisaC.

    We were in a similar spot with our taxes for 2005. We cashed out a retirement IRA to pay off our 2nd mortgage on our house. Didn't have any taxes taken out at the time of the withdrawal. We took a big hit come filing time.

    We had to sell our truck to have the money to pay Uncle Sam.
    Filed Ch 7 - 09/06
    Discharged - 12/2006
    Officially Declared No Asset - 03/2007
    Closed - 04/2007

    I am not an attorney. My comments are based on personal experience and research. Always consult an attorney in your area to address concerns related to your particular situation.

    Another good thing about being poor is that when you are seventy your children will not have declared you legally insane in order to gain control of your estate. - Woody Allen...

    Comment

      #3
      Ugh, sorry to hear that SinkingFast! Luckily I have some money put aside that has to be spent before the BK anyway, but I'd rather spend it on things like laundry detergent and food.

      What makes it worse is that if we had been responsible with the taxes in the first place we wouldn't be in this mess.

      So I am grumbling about my own irresponsibility as much as anything.

      The federal taxes will likely come out of our expected tax refund, which the trustee would probably want anyway, but still. I hate taxes!
      Lisa C.
      Filing BK due to business insolvency.

      Comment

        #4
        We didn't have savings to draw from to pay, so you're luckier in that respect.

        The fact we owed $8K+ was our own fault tho. When Hubby pulled the money, we needed every penny to pay off the 2nd. We opted not to have any taxes withheld. Which was totally against the advice of Hubby's investment consultant.

        We knew what we were doing. We just decided to worry about taxes later.

        Boy did it come back to bite us in the butt!!
        Filed Ch 7 - 09/06
        Discharged - 12/2006
        Officially Declared No Asset - 03/2007
        Closed - 04/2007

        I am not an attorney. My comments are based on personal experience and research. Always consult an attorney in your area to address concerns related to your particular situation.

        Another good thing about being poor is that when you are seventy your children will not have declared you legally insane in order to gain control of your estate. - Woody Allen...

        Comment

          #5
          Originally posted by SinkingFast View Post

          We knew what we were doing. We just decided to worry about taxes later.

          Boy did it come back to bite us in the butt!!
          Yes. I think I have just gotten a soft lesson in "why you should always think about taxes FIRST." As they say, the only absolutes are death and taxes...

          If we weren't filing BK we wouldn't have to worry.

          We've got all the payroll taxes due for the business, too. That should suck u p pretty much all the money that's left in the business fund. Just another step towards BK (since the loans haven't been paid in 2 months).
          Lisa C.
          Filing BK due to business insolvency.

          Comment

            #6
            BK forced our decision too.

            If we hadn't known we'd be filing, we coulda worked out a payment plan with the IRS. But there we were with significant equity in an asset we could not protect with an Exemption.

            If we'd have kept the truck, worked out a payment plan with the IRS, and filed, we woulda been hit with a double whammy. We'd have been paying the IRS and the Trustee woulda wanted the non Exempt monies too.

            Damned if you do. Damned if you don't.
            Filed Ch 7 - 09/06
            Discharged - 12/2006
            Officially Declared No Asset - 03/2007
            Closed - 04/2007

            I am not an attorney. My comments are based on personal experience and research. Always consult an attorney in your area to address concerns related to your particular situation.

            Another good thing about being poor is that when you are seventy your children will not have declared you legally insane in order to gain control of your estate. - Woody Allen...

            Comment

              #7
              Whether or not you filed bankruptcy, you would have owed the taxes. It may have been easier to hide from the IRS if you hadn't filed, but that doesn't make it legal. The IRS has a very long memory.

              Comment

                #8
                Originally posted by Grace View Post
                Whether or not you filed bankruptcy, you would have owed the taxes. It may have been easier to hide from the IRS if you hadn't filed, but that doesn't make it legal. The IRS has a very long memory.
                Neither of us is/was trying to hide from the IRS, Grace.

                Where ever in the world you got that idea, I'll never know??!!

                The IRS does accept payments. More than a few posters here have arranged payment plans with the IRS.
                Filed Ch 7 - 09/06
                Discharged - 12/2006
                Officially Declared No Asset - 03/2007
                Closed - 04/2007

                I am not an attorney. My comments are based on personal experience and research. Always consult an attorney in your area to address concerns related to your particular situation.

                Another good thing about being poor is that when you are seventy your children will not have declared you legally insane in order to gain control of your estate. - Woody Allen...

                Comment

                  #9
                  How much $$ are we talking here? You should get a tax credit for any Dependent Child care expenses.....Note that is a tax credit, not a deduction........good luck
                  NOTE: I am not a lawyer...any advice I give is for entertainment purposes only. Legal questions should be directed to competent counsel. I am just a troll. Or a Toad.

                  Comment

                    #10
                    Originally posted by no_it_all View Post
                    How much $$ are we talking here? You should get a tax credit for any Dependent Child care expenses.....Note that is a tax credit, not a deduction........good luck
                    We'll get a credit for a percentage of the money we paid to her. The problem is that we have to pay all the medicare, social security, federal unemployment taxes, and state unemployment taxes. That's a lot of taxes!

                    Filed with the state today. Came to about $300. The rest will come out of our expected tax refund. We won't get to keep that anyway (there's no way we can file and receive it and spend it before we file BK), so it's not a huge loss, just a lot of paperwork!
                    Lisa C.
                    Filing BK due to business insolvency.

                    Comment

                      #11
                      She worked for us during 2006 and that's the period we are filing for.
                      Lisa C.
                      Filing BK due to business insolvency.

                      Comment

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