advice please

[brokeone]

Good morning everyone,

Some of you are familiar with my situation and others are not.To recap,I owe approx.$50K. in unsecured credit card debt.I have decided to sell some things that are very dear to me and pay down some of my debt.I have made a deal and will be getting about $18K.I will be getting the money in a lump sum check.I know I will have to claim the money as income and pay taxes.I am not asking for a way to cheat.I repeat,I am not asking for a way to cheat.I AM ASKING,how would you guys/girls protect yourself from going deeper in debt at tax time when the IRS wants its share of the 18K? My current plan is to pay off one 10K card,and one 8K card.Those are the cards with the highest interest rates.When tax time comes around if I follow this plan,I won't have several thousand dollars to pay IRS and will be headed right back in to borrowing to pay bills.Have any of you had success with IRS in entering a payment plan,or deferring payments?When you get a chance please offer me your thoughts and advice.Thank you.
brokeone

[Minnymouth]

Do yourself a favor and take care of the IRS FIRST......
If your claiming BK then the cc are not an issue here, but taxes on the income would be....

Minny

[brokeone]

Hello Minny,

Sorry I didn't explain myself better.I am trying to avoid filing bankruptcy at this time.I am trying to figure out ways to get the debts that I have incurred paid off or down.I have no IRS problem at this time.I am looking ahead to April.I was simply hoping that someone had experience with the IRS and deferring payments/paying quarterly,etc.,that would keep me from borrowing next year to pay for the taxes on the $18K in a lump sum.
brokeone

[Minnymouth]

Ok, put enough aside to pay the taxes on the $28K,,, then apply the rest to your credit card expense.

Maybe what you can pay on the cc will lower the payments within your reach and your won't have to file BK..

Was there a purpose is paying the CC's off in full.....???

Also you can call the cc companies and ask what they would take to settle the debt?? May be less than what you actually owe! Worth looking into....

Better to pay IRS then a cc anyways, you never know what the future holds..

Keep us posted,

Minny

[brokeone]

Hello Minny,

Thanks for the extra $10K .It's really $18K that I'm getting .I like the idea of possibly lowering the payments to a position within my reach.the purpose of paying the CC's off in full is to get rid of them because they have the highest interest and are going to be doubling in minimum payment due come december/january.The other cards I have are remaining at current rates or are only having very modest increases.Hopefully I can pay more money on the lower rate cards after I get rid of the higher rate ones.I already called the credit card companies,all of them said they won't even consider a payoff until after I default ,which I have no intention of doing.Thanks for taking the time to help me.
brokeone

[Minnymouth]

LOL - if I had $10,000 - I'd loan it to ya!!!! How about that - a typo!!!!

Can see where your coming from on trying to pay the cc balances down. We have all been there also.

Since IRS tax bills are not dischargable, and IF you ever had to file BK, then you will still have to pay the IRS, where as a cc would be discharged.

Hope your strategy works and you don't have to file BK....that would be great.

Minny

[brokeone]

Thanks again for helping me out.I'll keep everyone posted.

brokeone

[AAAArt]

I have tons of experience with the IRS and payment plans, etc. First, Make sure that you file! Second, it is rather easy to get a payment plan set up with the IRS, but almost as much paperwork as a bankruptcy. Finally, If you think your credit card interest is high, you haven't seen anything yet. The IRS w/ interest and penalties is a real killer. I have paid them nearly $80,000 over the past 7 years on a $39,000 debt and still owe them nearly $18,000.
Negotiating with the CC compannies is a great idea. There is a post somewhere here on the Forum (I think under credit repair) which lists sample letters which you can view and download for free.
Although I don't know your exact situation, please be aware that you may owe Social Security Self Employment taxes on the $18,000. That would be another 15% above what you owe at yoour tax bracket.
In short, The IRS does not play nice with others and have powers far beyond other creditors. Be very careful. Best of luck, Art

[brokeone]

Hello Art,

Thanks for the information regarding Social security.I didn't think of that,but remember calling Soc.Sec.when I was thinking about getting a job that payed $22K and was told due to my age I could make that much money without penalty.I have not gone back to work yet.I'll have to contact SS and find out how this is going to affect me.Thanks again for helping me out.
brokeone

[Pinktiger]

I think you should go see a tax accountant. If you are selling things you paid something for, there may be a way to offset the sale. Also, you may, I believe, do income averaging on some things and apply it to your taxes over three years instead of one. There are probably many options you may not have even thought of that are legal and available to you. Another idea is to check with IRS.org and check out the information available there for free.

[Zapata]

When I owe the IRS money at tax time.... I file the return and there is another form (Form V??? Or something like that) that you file with the return. It sets up a payment plan. About a month after you file your return, the IRS sends you a payment plan -- usually 60 days out for the payment. Once I made a second partial payment and then they send you another letter telling you to when to pay the rest. If I am remembering this correctly....

At any rate, filing the return timely is key. They seem to work with us proles on payment plans.

[brokeone]

Hello Zapata,

Thanks for taking the time to help me.When I file my taxes I will ask the preparer to let me know what forms to use.

brokeone