I became self employed in April of 2007 while still holding a full time job....
I have not made any estiated payments for the year of 2007 but I am on a payment arrangement with prior years for back taxes owed
I am worried I have missed my deadline and now my arrangement with be thrown
Can I still file in April with everyone else and start 2008 estimated payments fresh..
I realize I will have penalties and fees but will filing in 2008 default my agreement?
2007-12-23 00:56:18 · 6 answers · asked by Olive Crayon 4 in Business & Finance ➔ Taxes ➔ United States
Yes, you were supposed to make estimated tax payments. It's very easy to owe $1000 dollars if you are self-employed and without the W-2, you no longer had another avenue to make tax payments (so the safe harbors won't be met either).
If you are able to file the 2007 tax return *and* pay the entire tax bill when you file, you may only be hit with an estimated tax penalty and not have your installment agreement default.
If you can't full pay the 2007 return when you file, it will default the installment agreement. You can get reinstated, but the payments will generally go up and you pay $45 for reinstatment.
I suspect that you never caught on that 30-40% of your SE income needed to be put aside for taxes just to stay current. Now that you are paying on prior years as well, you need to think 40-60%.
2007-12-23 05:06:48 · answer #1 · answered by Anonymous · 0⤊ 0⤋
It is best in this case to keep a low profile. The IRS has lots of other cases, no use in highlighting yours. If you are behind in your payment arrangement, get that current as soon as possible.
The examiner will not know until you file your 2007 taxes that you missed your 2007 estimated payments. Hopefully, you'll make a payment by 1/15/08 to cover all your 2007 taxes. A small late penalty will likely not trigger any action on your previous agreement.
2007-12-23 01:22:14 · answer #2 · answered by Thinker 7 · 1⤊ 0⤋
If you don't break the cycle of owing the government every year now you will always have to pay more than everyone else.
If you have an installment agreement and owe for the current year after the due date of the return it will cause your installment agreement to default. If you have not make estimated tax payments or increased your withholding at your job to cover the shortfall they may refuse to reinstate your installment agreement because you have technically defaulted. If you are in an installment agreement and you will owe you must make estimated tax payments.
You should fill out form 1040ES to find out how much the shortfall is. You should have all the information you need such as the profit from your business and how much you made in other income and withholding.
If you don't have the discipline to pay quarterly, you can pay more often such as monthly. Just put your SSN and ES on the check.
2007-12-23 05:00:23 · answer #3 · answered by Charlie & Angie G 4 · 1⤊ 0⤋
Unless you are underpaid on your taxes by more than $1,000, I don't believe you would be considered in default on your installment agreement.
If you believe your balance due is greater than $1,000, you could send in one estimated tax payment and hope for the best.
2007-12-23 04:41:32 · answer #4 · answered by ninasgramma 7 · 0⤊ 0⤋
I don't think I would trust anybody on this answer site to help me with something like this. Nofity and ask the IRS.
2007-12-23 00:59:53 · answer #5 · answered by dlo 3 · 0⤊ 0⤋
probably not, you could call a cpa and find out for sure.
2007-12-23 00:59:22 · answer #6 · answered by Jerry S 7 · 0⤊ 0⤋