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Additional Details
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Additional Details
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nicdon | IRS claiming I owe them 850 from my 2005 return...they overpaid me..help?? |
In 2005 i was out of work for 3 months and liquidated my 401K from my previousl employer to pay rent...I filed my taxes using TurboTax Feb 2006 and input all the information from the distribution. I was also a student at the time so I was given a refund of about 2000. Last week i got a letter from the IRS saying that they never took the 10% out from the distribution and that i owe 700 somethign PLUS 150 in interest since I should have paid this in 2006. This is my first notice even though IRS claims to have sent me 2 prior notices. They are demanding payment by May 12.
What can I do....am I SOL....i did my taxes correctly...this was an error made by either Turbotax or IRS....IRS won't even talk to me about it. They say after i pay then i can write a complaint letter. Is this my only option.
Additional Details
To VB and Ms Angel: no need to be so nasty. I am actually a very kind and responsible person. While i was a full time student i happened to find myself in between jobs and yes I guess i was stupid enough to find myself without savings. I liquidated 4800 (was immediately subject to 30% tax on that) to get my rent paid and purchase books and food. I recieved all my tax forms including 1099r and input ALL the information that turbotax allowed for. I was simply asking for assistance and not an attack on my person. You shouldn't assume too much. |
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JKML
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Usually you have to pay first, then submit a request for a refund. If you are expecting money back this year, you can ask them to withhold it to pay the balance due. Or, you can call the IRS and get an Installment Agreement pay plan to make monthly payments. If you don't pay it by the time it is due, they can hit you with failure to pay penalties, which have very high interest rates. I would suggest contacting a good accountant to figure out the specifics of your case. The IRS may be willing to settle the debt with an Offer in Compromise based on the mutual error, especially if you have an inability to pay the tax and you reasonably relied on the TurboTax and IRS statements received. |
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Judy1
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The IRS isn't the ones who made the mistake. Turbotax should have showed the penalty, but would do that based on info you entered - it's WAY to late now to be able to prove that you did or did not enter it correctly.
Yes, sorry, sounds like you are SOL. You did owe a penalty then, and didn't pay it, so you still owe it now, with interest. |
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Toto
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You should have records of the distribution showing what they deducted. If they took the 10% out of the distribution and you completed the tax forms correctly and can prove it, then send them a letter with copies of al the documentation. I believe any notice from the IRS has information as to where to send coorespondence. However, you have to remember that if they still find you owe them, the penalties and interest will keep accumulating. They should be willing to set up a re-payment plan if indeed you still owe. Good Luck! |
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Worldly25
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The best you can do is pay the bill, this stops interest and penalties from accruing. Then dig out your 2005 return, have a professional look it over. If you are right then file an appeal.
I |
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naleenasmom
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not too much you can do really. Its tough to fight the IRS. My BIL is going through the same thing. Its best to pay and be done with it. Since you DID owe the $ you are still obligated to pay it. |
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wartz
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Is the $700 the 10% additional tax for early liquidation of your 401(k)? If so, you have no case. |
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v b
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The IRS didn't make the mistake so stop blaming them.
1. You lost your job and didn't have any emergency savings. You chose to liquidate your 401K.
2. You are under 59.5 years of age and knew all along that the 401K would count as not only income but could be subject to a 10% penalty.
There is an exception if you were 55 years of age when you were laid off. The exception covers the 10% penalty.
3. Your 1099-R would have had a distribution code on it. "1" says you are subject to the 10% penalty. "2" meant you were covered by an exception. When "1" is coded, the plan typically withholds 20% (10% for tax and 10% for penalty). When "1" is coded, they typically withhold 10% for tax. The 10% for tax is woefully low as it assumes this is your only income for the year or that you took out a very modest amount.
4. When you filed, if the 1099-R was coded with "1" and you were subject to the penalty you were to add 10% of the distribution to the tax bill. Many people forget to add this 10%.
If it was coded as "1" and "2" should have been coded, then you needed a form 5329 saying you were eligible for an exception to avoid having the IRS computer come back and add the penalty anyway.
There is also an exception for paying the penalty if you were paying college expenses, but only up to the amounts allowed and again, only if you filed the form 5329.
5. You need to research your records. The part about "after I pay" isn't about getting rid of the debt, it's getting rid of any penalties. (Interest sticks.) |
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Ms. Angel..
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Get real IRS won't talk to you, you must of called and acted a fool. Because you think you are right. Well apparently you love to blame everyone but yourself. If the error was in turbo tax you are the one that input the information.
You underreported on your tax return, now you owe so now request and installment agreement. Download form 9465 from the IRS website and mail it in to the appropriate address or call 1-800-829-0922 to request and installment agreement,
IRS did send prior notices, did you move or forget about them. IF you don't pay IRS will place liens, levys, garnish wages etc.
And if you feel you can still write your complaint letter but in the mean time pay, and if IRS finds fault at their end they will refund you, but IRS is not wrong. |
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