Anmended Tax Form?

Question

Last December I received a letter from the IRS saying that we claimed my husbands children and so did the mother on the 2005 taxes. (We thought we had an agreement that we would file the children this year and she lied and we don't want to argue with her). I filled out the 1040X form and found out that we owe $2,000.00. We cannot pay it in full right now. What can I do? Do I still mail in the 1040X with no payment? Can I wait till I file 2006 taxes and have them take it out of my return? I heard that you can make payments...but how high is the interest?? How long do I have till I have to pay?

Answer 1

If you are unable to full pay your liability you should consider financing the full payment of your tax liability through loans, such as a home equity loan from a financial institute or credit card. The interest rate a bank charges is usually lower than the combination of interest and penalties imposed by the Internal Revenue Code. If you cannot pay in full immediately, the IRS offers short-term extensions of time to pay in full from 10 to 120 days.

Installment Agreements
If you cannot full pay your tax liability in a lump sum, the IRS offers a payment by installment option. An installment agreement would allow you to make a series of payments over time. Installment agreements may be set up in various ways:

Direct Debit from your bank account,
Payroll Deduction from your employer or
Regular Installment Agreement
If you enter into an installment agreement, your payment amount should be based on your ability to pay and should be an amount that can be maintained over the duration of the installment agreement.

Direct debit or payroll deduction installment agreements provide an opportunity to make timely payments automatically, and therefore, these payment methods reduce the possibility of defaulting your agreement.

To request an installment agreement, when you are filing a tax return for which you are not able to provide full payment , you may submit Form 9465 (PDF), Installment Agreement Request, or your own written request for a payment plan, attached to the front of your return.
To request an installment agreement after your return has been filed and you have been billed (you received an IRS balance due notice), you can use the Online Payment Agreement (OPA) application or you may submit Form 9465 or your own written request for a payment plan, attached to the front of your return or bill.

You will need to specify the amount you can pay and the day (1st-28th) you wish to make your payment each month. The IRS will respond to your request, usually within 30 days, to advise you that:

your request is approved
your request is denied or
additional information is needed

If the agreement is approved, a one-time user fee will be charged. The user fee is $105 for regular installment agreements and $52 for agreements to be paid by way of direct debit from your bank account. Taxpayers with income at or below certain levels can apply for a reduced user fee of $43.

For a direct debit installment agreement you will need to provide your checking account number and your bank routing number to initiate the automated withdrawal of the payment.

The user fee for restructuring or reinstating an existing agreement is $45 regardless of income levels or method of payment.

You may contact the IRS by phone or in person, or you may submit Form 9465 (PDF), Installment Agreement Request, through the mail. The form has space for you to write your checking account number and your bank routing number. However, if you choose to do so, you may staple a voided check to the form.

To initiate a payroll deduction installment agreement, submit Form 2159, Payroll Deduction Agreement. Form 2159 must be completed by your employer, so the IRS will set you up a regular installment agreement, and then convert it to a payroll deduction agreement upon receipt of the completed form from your employer.

Remember, penalties and interest will be added to the balance due even if an installment agreement is approved. For more information about installment agreements, please see www.irs.gov and enter the keyword "installment agreement".

Responding to your IRS Notice
It is important not to ignore an IRS notice. If you do not full pay your tax liability or make an alternative payment arrangement to pay the amount you owe in full, the IRS is entitled to take collection action. The IRS may file a Notice of Federal Tax Lien, and may levy and seize your property to satisfy the unpaid liability. You may refer to Topic 201 for information about "The Collection Process".

If you are unable to make any payment at this time:

Individual taxpayers may call 1–800–829–1040
Business taxpayers may call 1–800–829–4933 to receive assistance.

If we determine that you cannot pay any of your tax debt, we may temporarily delay collection until your financial condition improves. In order to assist you, we will need you to provide pertinent financial information from documents you should have available to you during the call, such as current pay stubs, rental agreements, or mortgage statements, and car lease/loan statements.

You have rights and protections throughout the collection process. If you would like some printed information on "your rights as a taxpayer," making arrangements to pay your bill, installment agreements, and what happens when you take no action to pay, refer to Publication 594 (PDF), The IRS Collection Process, and Publication 1, Your Rights as a Taxpayer.

Answer 2

An agreement on claiming children must be in writing, and contain certain particular elements, to be enforceable. The IRS can't rely on verbal agreements. So if she agreed verbally that you could claim them but then backed down, there's nothing you can do about it unfortunately.

Yes, send in the amended return, even if you can't pay it all right now. If you can send part of it, do that. The IRS will set up a payment plan for you. I believe that interest right now is 8% - a lot better than most credit cards. You can talk to them about how much the payments would have to be.

They might take it out of your 2006 refund automatically, but might not if all the paperwork is still in process on fixing last year. If they don't, when you get the money you could send them what is outstanding yet and get this cleared up.

Good luck.

Answer 3

It is always best to file your taxes, even if you are unable to pay at the time. They will probably cross-collect any 2006 tax refund you have coming. That will lessen the penalties and build-up of interest.
If you can contact your local IRS office and let them know the problem, they may go ahead and process your 1040X in house, so that you can have it come out of your 2006 refund.

1-800-829-1040
www.irs.gov

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Answer 4

You can attach a seperate form to set up an installment payment plan which can be for as long as 60 months, but for $2000 I would not recommend that long. Be realistic in what you propose and then always ALWAYS make your payments. These matters are virutally automatic when the amount due is under $10,000. I would advise that you use your refund this year (if any) to pay it even faster.

Answer 5

File it as 2005, pay what you can afford, attach a letter explaining the situation and asking to set up payment plan. Important thing is to get it filed, that sort of freezes any real potential non-compliance penalties, you'll just get hit with interest

Answer 6

flow on your community submit place of work or library do not flow to a tax place of work and ask for loose place of work artwork - they don't artwork for the IRS and extremely fall ill of people getting into their place of work inquiring for loose suggestion/place of work artwork/etc.