[bkp123]

I started a new job on January 4, 2010 and must have accidentally "checked" the exempt box when filling out the W4. I'm not sure exactly why I would have did that because I am not exempt. Well, to make matters worse, I never looked at one of my paychecks throughout the entire year in 2010. Not a good reason but I guess I never looked because I never received paper copies because they were all electronic and each paycheck was direct deposited every two weeks. I did not notice a difference in take home pay because I got a slight raise in this new job compared to my old job and also, I was not putting money into 401K in 2010 so I never really had a reason to look. All I know is, I am looking all the time now and have corrected the exempt checkbox.

With all of that said, I am looking at my electronic check from December 23, 2010 and it reflects YTD taxable wages of $80,846 and YTD net pay of $70,934.88 and no federal taxes paid in 2010. I did not know that I was not paying taxes so the money that should have been taken out is gone - i.e. already spent. We have hardley any savings and will not be able to pay the huge bill that I anticipate paying.

I know it's mostly my fault for being stupid by not looking at my paystubs as well as accidentally checking the box but I am also kind of ticked off at my new employer for not correcting the issue before it got out of hand. I mean, how could I be exempt when I checked the married box and make over $10K per year?

I am trying to figure out my options because I figure that I will owe the IRS at least $15K and I do not have the money to pay it and will not have the money to pay it by 4-15-11, unless I skip paying about 5 months of house payments and credit cards. Any help is greatly appreciated.

[kraftykitten]

I think it would be best if you seek legal advice from a lawyer about this matter before the problems continue to build up. It might shed some of the heavy burden of worry. If you suddenly stop your other payments, then interest amounts will build up and accumulate a bigger debt. Do not skip house payments as this could result in losing your house. Please seek legal advice & support. I hope it works out OK.

[AtlantaTaxExpert]

A lawyer is NOT needed.

Get the return professionally prepared, and submit Form 9465 to set up a payment plan with the IRS. You will pay a fee of about $100 to set up this plan, but once it is set up, you will make monthly payments at an interest rate of about 8% until you pay it off.

[ScottGem]

I don't know if it is the responsibility of your employer to verify what you put down on the W4. I don't think it is. I know it IS your responsibility to review your deductions for accuracy.

But the IRS is not unreasonable. If you acknowledge your mistake and setup a payment plan as ATE advised, you should be OK.