I have a bit of an issue. This tax season, I will probably end up owing around $45,000 in taxes. Yes that much. IF not more. $60,000 worst case scenario. I am currently unemployed, my car was repossessed, and I am filing for bankruptcy. I literally have nothing, no cash, no property of value. The only thing I own is used clothes, shoes, basic toiletries, I can probably list everything I own on a single sheet of paper, I could probably get a few hundred bucks if I sold it all at a premium. I am currently living with my friend, he owed me a good deal of money, so in lieu of payment he will be taking care of me till I can figure out what to do.

The basic question I have is what is going to happen? I have no idea what is going to happen as far as these taxes are concerned. I can't afford it, I don't have a job, I have no job skills, I will never be able to pay it, even if I had the desire to. That is basically it, what is going to happen?

P.S. This does not include state taxes, this is just federal.

You need to file the return, because the failure to file penalties are a LOT higher than failure to pay.

Once filed, explain to the IRS your current situation. The IRS will probably put your account in abatement and check in with you to determine if and when you get back on your feet.

It should be clear to them that you cannot pay and that you have no assets to seize.

You must have a way to earn money. If you owe that much taxes, your income had to be very much, so how did you make all of that money?

I had the same thought as Chuck. If you are that destitute, then how did you build up such a big tax bill? Sorry, but something doesn't fit.

But ATE gave you the best advice. You do need to file and you DO need to work with the IRS, trying to duck out will make matters worse. Talk to the attorney handling your bankruptcy, he may be able to advise.

While this situation IS unusual, it is NOT unprecedented.

People who have been employees their entire lives start working as independent contractors, say in software development or IT. They work hard and make about $150K.

After expenses, the net is $130,000.

The self employment tax by itself is about $20K, and the federal income tax is about $30K. If he lives in a high tax state like New York, another $15K for the state is very possible.

The problem is the newly-minted independent contractor does NOT know to put money aside to pay these taxes, and there is no longer an employer to do it for them.

Then some financial disaster hits, and the contractor now has this tax due in April 2015.

Las Vegas, played table games, made a ton, spent all the money.

Unluckymatress' scenario is equally feasible.

Quote:

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Originally Posted by unluckymattress

Las Vegas, played table games, made a ton, spent all the money.

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OK, that makes sense. But the next question is what did you spend your winnings on? Nothing that you could sell to pay your taxes? I'm still left with a feeling that something doesn't fit.

But what I can tell you is that, while the IRS will work with you, they will be on your back until your tax debt is paid off. Gamblers who don't pay their taxes are something the IRS doesn't particularly like. So, if you get a job, gamble again, get a windfall, the IRS will be right there to get its share.

Paid off my student loans, plane trips, first class is expensive, women, booze, I had a bunch of assets, but I sold them, I spent that money. Just stupid things, it's 100% gone. I am also in debt up to my eyeballs. See there is something you should know about me, when I screw up I do it right.

Yep, you did that. At least you were smart enough to pay off your student loans. But, like I said, you will have the IRS looking over your shoulder until your debt is paid.

Supposedly we have a new friendlier IRS, who wants to sit down with you in person to discuss ways to pay your taxes without the usual whopping interest and penalties (but still pay the tax).
So find out where the nearest office is and contact them... quickly, before the April 15 crowd starts deluging them.

The crowds are already descending, but the OP will be dealing with a section of the IRS that does not deal with the annual filing process.

That said, the sooner he contacts the IRS and establishes a working relationship with the individual agent who will be working his case, the better.