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  1. #1

    Default What to Do if You Owe Federal Taxes from W2s but Don't Have the Money

    So I am up a creek here, and need some advice.

    I owe about $300 on my federal tax return. I worked temp jobs through staffing agencies last year, and apparently, not enough federal taxes were withheld (according to Turbotax). I should have triple checked to ensure that enough money was being withheld, but I did not, and am learning a hard lesson.

    I don't have $300 to pony up, nor do I have any money for lawyer fees to get this crap sorted out. What the hell do I do?

  2. #2
    Join Date
    Jun 2006
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    Default Re: Owe $300 Federal Taxes from W2s, Don't Have the Money

    File for an extension.

  3. #3
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    Oct 2014
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    8,019

    Default Re: Owe $300 Federal Taxes from W2s, Don't Have the Money

    Quote Quoting anonymous441
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    So I am up a creek here, and need some advice.

    I owe about $300 on my federal tax return. I worked temp jobs through staffing agencies last year, and apparently, not enough federal taxes were withheld (according to Turbotax). I should have triple checked to ensure that enough money was being withheld, but I did not, and am learning a hard lesson.

    I don't have $300 to pony up, nor do I have any money for lawyer fees to get this crap sorted out. What the hell do I do?
    No need to panic. You have two choices here. Because the amount owed is less than $1,000, you may file an extension to October 15 using Form 4868. Pay the tax when you file the return. You will owe a little bit of interest and perhaps a small late payment penalty, but you will at least avoid the big late filing penalty.

    Your other choice if you cannot pay it by October 15 is to attach Form 9465 to your tax return and ask for an installment agreement. See also the related Form 9465 instructions. If you can pay at least $25/month and have never had an installment agreement before you are guaranteed to get a approved for the installment agreement. You can do that by filing the return by April 17 or do the extension and see if you can pay by October 15, and if you can’t do that you can attach the Form 9465 then. If you already know you need more time than October 15 file the return by April 17 and attach the Form 9465. The advantage to doing that is that it will reduce the amount of the late payment penalty that gets attached. That penalty on $300 owed is just $1.50/month, but after the 9465 is approved it gets cut down by half to just $0.75/month. Not huge, but every little bit of savings can help.

    The main thing it to ensure you either get the extension or the return filed by April 17. If you fail to do one of those things it will cost you an expensive late filing penalty.

  4. #4

    Default Re: Owe $300 Federal Taxes from W2s, Don't Have the Money

    Thanks, both of those forms seem like they would be very helpful. Appreciate your guidance, thank you.

  5. #5
    Join Date
    Sep 2010
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    19,749

    Default Re: Owe $300 Federal Taxes from W2s, Don't Have the Money

    Just to add some convenience to what TM says:

    You can file an extension alone here: https://www.irs.gov/filing/free-file...nsion-for-free

    You can also pay what you can and file for an extension here: https://www.irs.gov/payments/direct-pay
    At that link you can also set up a payment plan if you like.

  6. #6
    Join Date
    Oct 2006
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    16,249

    Default Re: Owe $300 Federal Taxes from W2s, Don't Have the Money

    Quote Quoting flyingron
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    Just to add some convenience to what TM says:

    You can file an extension alone here: https://www.irs.gov/filing/free-file...nsion-for-free
    I agree but we should note that those are all third party websites and most likely the OP's own software, online program, tax preparer can do the same.

    You can also pay what you can and file for an extension here: https://www.irs.gov/payments/direct-pay
    At that link you can also set up a payment plan if you like.
    Again, most online software or professional software (wherever the OP did the taxes) can do the same.

  7. #7
    Join Date
    Sep 2010
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    19,749

    Default Re: Owe $300 Federal Taxes from W2s, Don't Have the Money

    They are not "THIRD PARTY" websites. They are all links into various sections of the INTERNAL REVENUE SERVICE'S own site.

    He doesn't appear to have a tax preparer, nor is TURBOTAX (find program that is is) an easy way to do this unless you're also filing.

  8. #8
    Join Date
    Oct 2006
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    Default Re: Owe $300 Federal Taxes from W2s, Don't Have the Money

    Quote Quoting flyingron
    View Post
    They are not "THIRD PARTY" websites. They are all links into various sections of the INTERNAL REVENUE SERVICE'S own site.

    He doesn't appear to have a tax preparer, nor is TURBOTAX (find program that is is) an easy way to do this unless you're also filing.
    Ron, you might want to delve a little deeper into the sites that you linked. Other than a small part of one of them, all of them eventually go from the IRS site to third party providers.

  9. #9
    Join Date
    Oct 2014
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    Default Re: Owe $300 Federal Taxes from W2s, Don't Have the Money

    Quote Quoting flyingron
    View Post
    They are not "THIRD PARTY" websites. They are all links into various sections of the INTERNAL REVENUE SERVICE'S own site.
    While the IRS provides the links, they are not services provided by the IRS. They are third party services that provide free filing services to taxpayers meeting certain conditions under free file program arrangements with the IRS. Why must the IRS resort to that rather than providing taxpayers its own software programs for preparing and filing returns? Because the tax prep industry pressured Congress into passing a law that prohibits the IRS from providing tax prep software for taxpayers to use to file their returns and extensions. I think that was misguided legislation but its not surprising that the tax prep industry wanted to protect its business with legislation that protected its turf.

  10. #10
    Join Date
    Oct 2006
    Posts
    16,249

    Default Re: Owe $300 Federal Taxes from W2s, Don't Have the Money

    There is one, non-official way to handle this that is workable if the party can pay the balance due within four or five months.

    File the return on time and send in a partial payment of whatever you can afford to send. In about 30 days you will get a bill from the IRS. Again, send in whatever you can afford to send at that point. You will get another bill. Do the same. If you can pay it off within 4 bills, you will avoid the fee to set up an installment plan, avoid the late filing penalty and give yourself an unofficial short term payment plan. The current fee for a non direct debit installment plan is $105.00, which is a lot to spend if you only owe $300.00.

    Again though you have to be pretty sure that you can pay it off in a few months. The IRS is not going to get too intense about a $300.00 balance due but eventually they will send an intent to levy letter and you want it paid off by then.

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