[The Beast1]

I made the cardinal mistake of not updating my W4 from last year.

I got a refund last year for some education credits and had my withholding allowances set to 8 or some unholy number.

I didn't change it for the new tax year. Yes, this was stupid. Lesson learned.

I realized about a month ago my error and changed my withholding allowances to 0. I now have a tax bill of about $4,863 if my math is correctly.

The irony is, I already have more than enough cash and can pay it off in full. The problem is, I want to avoid an under payment penalty.

From what I've been reading, if I fill before January 31st I may be able to avoid it. But I'm not sure and a bit worried, i'm good at budgeting and have good credit so I can take a penalty blow but I would prefer not to.

Any idea how I can over come this?

[babelfish669]

You owe the IRS under 7 figures, you can pay it off eventually, don't sweat it

[BoneDaddy]

(11-13-2013 06:17 PM)babelfish669 Wrote:  

You owe the IRS under 7 figures, you can pay it off eventually, don't sweat it

Agreed, shouldn't be a big deal. I've shot low on quarterly estimates before and ended up owning a fairly large balance. April 15 is Extension day in my world and when the real tax day (Oct 15) rolls around and I finished my return, I sent in what I should have already remitted by April 15.

I got a letter back indicating that I owned some amount of penalty & interest, but the amount of P&I was never enough to worry about in the grand scheme of things.

[paninaro]

Send an estimated tax payment to the IRS now for that amount. Don't wait until you file your return.

[Hotwheels]

I sent in a 70K plus check for the taxes last year and never heard anything about it.

Why be so concerned?

Have never done the quarterly thing. Have thought about it though in case my stuff goes to shit...

[iknowexactly]

I screwed up once while contracting and ended up owing ove 25,000. It was worse once I hit 25k, they send you to a different department on the phone with nastier collection people.

Still, they just put you on a payment plan if you are broke, they deal with it all the time. They know you can't pay what you don't have. You sound like you aren't even that bad off, you can pay them.

One time the worker told me to ask for some kind of forgiveness program after I paid all the tax and penalties.

You explain you were having some kind of problem-- health problem or mental problem-- that year and that's why you underpaid. My mom had died one year and I was depressed, and I told them that in the application.

To my amazement they sent back something like 5k in penalties and taxes, because I had never really screwed up before. It's actually quite generous.

Most of the people I dealt with were nice and helpful actually.

[The Beast1]

(11-14-2013 02:47 AM)paninaro Wrote:  

Send an estimated tax payment to the IRS now for that amount. Don't wait until you file your return.

That's what I needed to know. I'm looking at the form now and getting it paid.

Thanks bud!

[babelfish669]

Yeah good advice here. Some things that should make you sweat:

- Not filing taxes at all
- Filing false tax returns
- Spending huge amounts of money before paying taxes on them

The first two are what will get you in deep shit and will likely result in jail time. The second one can result in taxes owed which are impossible to ever pay off, but your not going to be thrown in jail. If you have something that will take a few months or a year to pay off, no big deal.