Can't Pay Income Taxes

by Steve
(South Carolina)

Can't Pay Income Taxes

I withdrew $30,000.00 from a retirement acct. to survive. At tax we found that we owed $8040.00 in taxes(federal).

We did not file the taxes. We did however file the next year and are due a refund. We have not received it but did get a state refund.

Should we re-do the original filing not reporting the withdrawal? We are unemployed at the present time, and we are in no condition to pay anything at all...

Can't Pay My Taxes

What if I can’t pay my taxes?

Will Not Be Able To Pay

by Bill
(Salt Lake City, UT, USA)

Hi! I know I am going to be in a bad situation next April (2010) and I am wondering if there is anything (other than finding/saving/making all the cash that I can) that I can do now to help my situation then.

Here's the story... I am in early retirement, unemployed, and not eligible for unemployment. I was trying to sell my Seattle home to move to Salt Lake City (better potential for jobs I thought). The home did not sell (8 months). My wife and son had already moved to Salt Lake. It had been 8 months with no hope, the economy was in the toilet, my IRA was worth 1/2 of its original value and shrinking, and my wife was at her end with us being separated. Just after the new year we decided that I should cash out the IRA and purchase a home in Salt Lake. We did this, accepted the $30K penalty that would be due next April (2010) assuming that I would easily be able to find work and save for this. We bought a home for $270K lock, stock, and barrel and rented out the Seattle home. In order to do this, we also used $70K of the $100K equity line on our Seattle home. This has been pretty nice because we have someone else paying our Seattle mortgage/ins/taxes and our current bill is but $300/month. The problem is that I have not been able to secure a full-time job. And the prospects are dismal. Hoping for the best but planning for the worst now. I am pretty sure that we will be out-of-funds in January. I will be able to get part-time work and cover our bills and food, but I am fairly certain that I will not be able to meet my tax bill. Should I contact them now, in January, or wait until April? Any advice on handling the tax bill?

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