My Taxes Are Finally Paid!
I mailed my 2007 tax forms and payments today. It’s such a wonderful feeling to know that for the first time in 3 years, I’m not going to be on any payment plan with the IRS. For the last 3 years, I’ve been on some sort of payment plan with the IRS for not completely paying off my tax obligation. I got myself in this situation because I either wasn’t putting away enough for taxes or because I was dipping into my tax savings when times got hard. The bad thing about owing the IRS money is that you owe them money. The good thing about owing the IRS money is that if you’re willing to pay, they are very flexible and will work with you in order for you to pay off your debt.
I remember the first time I realized that I was going to owe money to the IRS. I thought for sure that I was going to go to jail for not paying my taxes in full. I think I was around $18,000 short. I can remember nervously freaking out at the thought of owing Uncle Sam money; it really scared me!
When I called the IRS to let them know that I didn’t have all of my tax money, I was very surprised when the lady on the phone told me that I can pay over time. She asked me a series of questions such as how much I could afford to pay each month and when I wanted my payments to be due. In the end we agreed on a fixed amount. The agreement was that I had to make my payments on time, each month, and I also needed to pay the next year’s taxes in full. If I broke any of those terms, they could’ve placed liens and garnished my wages, etc. Lucky to say, I paid them off in time!
The next year, and the year after, I was in the situation! I was in the same situation because each year, I would use my income to pay off my previous year’s tax liability. And for a while, I really though that I was going to be like this forever! Luckily for me, it wasn’t the case. I was able to pay off all of my tax and I still have money saved for my 2007 taxes.
I promised myself that I wouldn’t let myself be in this type of situation again, ever. To help me keep my promise, I’m putting away 35% of my monthly affiliate earnings in a special business checking account. I’ve also started making quarterly tax payments. Making quarterly tax payments will help me out because I won’t be tempted to use the money when times get hard. I will also not get penalized by the IRS each year!
So if you’re in a similar situation, remember the following:
- If you owe money to the IRS, talk to them. The worst thing you can do is pretend as if you don’t owe, or as if the it will go away if you don’t think about it. It will follow you until you pay it off. Call the IRS, talk to them, explain your situation. They will listen to you and work with you to pay off your liability.
- Make quarterly estimated tax payments. If you’re self employed and are paying a lot in every year in taxes, the IRS expects you to make quarterly estimated taxes. If you don’t make them, expect a penalty.
- Put away a good percentage of your affiliate earnings for taxes. Don’t do what I did and use your tax money to help family, friends, or yourself when times are hard.
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Comments
Congratulations! I have been on payment plans in the past. It is great to be off of them and able to pay it all at once. I agree that talking to the IRS is essential. Truthfully, the IRS is a “nicer” creditor than many collection agencies.
@Pete,
You are very right about the IRS being nicer than collection agencies. Those people at the collection agencies are just ruthless! They’re evil!
Congrats - mine aren’t filed yet, and I know I owe. However, I did make quarterly payments, so it shouldn’t be *too* bad. I’ll be talking to my accountant today to find out.