Anonymous asked in Business & FinanceTaxesUnited States · 1 decade ago

Help~ I made a mistake last year, now we owe $$ to the IRS!?

When we filed our taxes last year, we failed to include my husband's unemployment compensation. We received a letter xmas eve explaining that we owe $2000! That would be our whole return (that we were deperately counting on!) this year. Is there any way we can make payments and still receive our return for 2009???

10 Answers

  • Favorite Answer

    Well your probably not going to pick this as the best answer.

    You'll be further ahead to just let them have your 2009 refund.

    If you live in a state that taxes unemployment then file an amended state tax return. In Iowa if you amend it; no penalty just interest. If Iowa sends you the initial letter it has penalty and interest.

    Source(s): I'm an Enrolled Agent.
  • 1 decade ago

    An installment agreement, where you agree to pay a fixed amount each month over time, will cost you $105, and interest charges will still accrue. An installment agreement will not result in your being able to keep your refund. Quote from the IRS:

    "As a condition of your installment agreement, any refund due to you in a future year will be applied against the amount you owe. Therefore, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. The IRS will automatically apply the refund to the taxes owed. If the amount of your refund does not take care of the tax debt; then your installment agreement continues until all of the terms are met."

    So, doing an installment agreement is pointless and expensive.

    The Earned Income Credit and Additional Child Tax Credit have been made more generous this year. Also, if you and your spouse have been working, there is an $800 Making Work Pay credit that may benefit you depending on how much was withheld for taxes.

    Get you tax return done as early as possible and submit it. The sooner you pay off the IRS bill the better for you. Hopefully you will have some refund left over from the increased tax benefits that have been put in place this year.

  • Anonymous
    1 decade ago


    You should call and confirm the amount (it's not like you can't). Then wait for a bill. While the IRS would let you set up a payment plan, if you will file in January there is no point. Whether or not there is a payment plan, the IRS *will* keep the refund. So save the fee and don't set up an installment agreement. (You can do the 120 day extension to avoid getting nasty letters for a while.)

  • Jo-ann
    Lv 4
    4 years ago

    Your mother is required to pay the additional tax that she should have paid, but she may not be liable for any penalties/interest. You should go to the credit union and demand that they give detailed information on who the tax service was. Then contact the IRS and give a full explanation with the all the info about the tax preparer you can get. They may waive the penalties, if any have been charged, or go after the tax preparer for them. There are groups that do volunteer tax preparation for low income people, but volunteers from the IRS doesn't sound right.

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  • 1 decade ago

    They aren't going to intercept your refund,, This is just the 1st collection attempt,,

    The letter should have a respond by date, so file your 2009 return and you'll get your refund, If you fail to respond by the date, you'll be be in deep doo-doo at that time ...

    You can stall them by sending them a reason why you feel you don't owe the tax, A couple months later they'll respond telling you that you most certainly do,, At that point you can agree to a payment or Fight on in tax court baby !!!

    I've been there with them over some unreported capital gains tax,

    I lost ... but I did shave a few grand off my bill ...

    Good luck,,

  • Anonymous
    1 decade ago

    Dear S: If you can get an agreement in place the IRS will not touch your refund. Not much time to do it but call 800-829-1040 and try to set up the installment agreement. You must be able to pay off the debt within 3 years and the cost is about $105 (less if you can do an auto with drawl plan).

    This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided. Click on my profile to read more Errol Quinn Enrolled Agent

  • Anonymous
    1 decade ago

    You have received a notice that IRS proposes to assess additional taxes because you didn't report the unemployment compensation. You have not received a bill. You will get another called a Notice of Deficiency before you get a real bill. Until you actually get the bill telling you that your account has been adjusted, IRS will not keep your refund. You can file your return early and get your refund. IRS will allow you to make payments of as little as $50 per month but will charge a processing fee along with late payment penalty and interest.

  • Anonymous
    1 decade ago

    Call the IRS now and ask if you can be put on a payment plan for that money. If you talk to them, you might be able to get away with not losing your refund but if you just ignore the letter, they will take your refund.

    And for the future, you should think about reducing your withholding so that you can keep some of that money during the year instead of giving it to the IRS for a year with no interest.

  • tro
    Lv 7
    1 decade ago

    you can apply for installment payments and it will cost you to set up that arrangement

    it is a very strict contract and if you default just one time, the entire amount is immediately payable

  • Anonymous
    1 decade ago

    Yes. Contact the IRS and ask them to do just that. They are not in the business of driving you into bankruptcy. They CAN help.

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