We have not filed my husbands 2005 or 2006 1099's. We couldn't afford to pay. We are definatly filing at the beginning of this year. The 2005 1099 was for about 31,000. And the 2006 1099 was for about 34,000. We really want to clear this up and get straight with the IRS. He now has taxes taken out of his check. My question is....when we get a huge bill to pay back how does the IRS go about computing how much you pay back and when? Also if we can't afford the bill can we file bankruptcy on taxes? We are terrified for the beginning of the year to come because we are so afraid of how this is going to hurt us finacially. Any advice or help would be appreciated. Thanks!
2007-08-20 12:40:32 · 5 answers · asked by wondering247 3 in Business & Finance ➔ Taxes ➔ United States
It is not the gross amount you were paid on which the taxes are calculated. It is the net amount after expenses for running the business are deducted. Get good help, file the taxes and, if needed file for either an installment payments arrangement or an offer in compromise. You will be much better off getting this issue resolved than worrying about it.
2007-08-20 17:56:55 · answer #1 · answered by dcholsted 2 · 0⤊ 0⤋
You may not owe as much as you think you do. Generally, IRS sends a bill for the full amount plus penalty and interest when a return is filed without payment. There will also be a failure to file penalty assessed. You need to engage the services of a CPA to take care of the filings and represent you before IRS to try to minimize the penalties if possible. You can also set up and installment agreement for the taxes owed.
You cannot get out of taxes in a bankruptcy. You really need to get professional help.
2007-08-20 21:02:26 · answer #2 · answered by braskincpa 1 · 2⤊ 0⤋
You should be afraid. The assessment notice from the IRS could come any day. Frankly I'm a bit surprised that you have not heard from them for tax year 2005 yet.
At any rate, you need to file amended returns for 2005 and 2006 assuming that you filed returns for those years without the self-employment income listed. Do this as quickly as possible and pay as much as you can afford to limit the damage from interest. If you haven't filed returns for those years at all, file ASAP as you're running up penalties for late filing every month in addition to the interest for non payment/late payment of tax.
If those amounts represent the net self-employment income you're looking at nearly $10,000 in self-employment tax alone between the 2 years. Income tax will be added to that and will depend upon you filing status, exemptions, deductions, etc. so it's not possible to say how much you will owe.
You'll be able to set up a payment plan to clear the debt. Don't waste time setting that up as the IRS can garnish both of your paychecks and attach any and all bank accounts if you delay.
Bankruptcy won't clear those tax debts although it would clear your other debts and possibly make it easier to clear the tax debt as a result. That should be a last resort for obvious reasons.
2007-08-20 20:30:34 · answer #3 · answered by Bostonian In MO 7 · 5⤊ 0⤋
You can work out a payment plan.
No, you cannot go bankrupt on taxes.
2007-08-20 20:24:01 · answer #4 · answered by Mark S 5 · 0⤊ 0⤋
If that is your only income, it shouldn't be that bad....and the IRS will work a payment schedule for you.
2007-08-20 19:49:25 · answer #5 · answered by Outside the box 6 · 0⤊ 2⤋