I was planning to be dancing over retiring my First USA card this month, but DH's work project has ended rather suddenly so he is between jobs and our snowball is temporarily on hold.But... I am doing a small dance because, thanks to W's tax rebate and the correction of a several-months-old error in the balance due, our IRS bill has gone below $40,000! $39,918 is still a horrifying number, but a whole lot lower than the $70,000 or so it was when we started out. According to our payment schedule, it'll be knocked out in 3 years, however we're hoping to cut that in half when we can get our snowball rolling again. So here goes...One, two, three, kick! Shuffle shuffle ball-change, brush brush tap tap tap...
"our IRS bill has gone below $40,000! $39,918 is still a horrifying number, but a whole lot lower than the $70,000 or so it was when we started out."mlk58I am in AWE! Someone who's IRS bill was higher than ours. $25,000 here the first year, then got hit with $10,000 the next. After the dust settled for a total of $35,000 with nice penalties and interest. I did file a complaint with the CPA board about the CPA who created the whole situation, though they just put it in his file. It did NOT give me much satisfaction. We had just lost our home to fire the previous end of November and lost EVERYTHING, our home, business office (self employeed) and school (we homeschool) and were WAY UNDER insured. The night I found out how much we owed I layed in bed crying and praying to die. I can not even imagine what would have happened if I had owed $70,000. It must have been devestating to you I'm sure. When you are finished paying it off may we all sing, laugh and do the HAPPY DANCE with you.Stockbuyer2
Wow. Just amazing....don't know what I'd do. I thougt I felt bad cos I had 7k. Keep plugging. I don't know you but I am pulling for you. I have some books I can recommend, if you want. Books that helped me during my times of doubt and fear. Good luck and god bless.EdP.S. Email is: firstname.lastname@example.org you want to drop a line off the board.
I am dumbfounded. I will stop whining about my measly bill now.But congratulations and again. You have done great. Hopefully your snowball gets going and you can dance and dance again. fredinseoul
oh my word! I am very happy that you got below the 40k mark. I am praying that after this run-in with the IRS for what now seems like a measly $1,300, I will never owe them another penny except for what comes due at tax time.oy vey!mike
$70,000. Damn.I thought it was pretty bad when I got poppped for $1700 a couple years back. Halfway through my interview at H&R Block, my preparer looked at me grimly and quietly said "Man, you're gonna get nailed." I wish I knew your story back then; I probably would have just laughed at my bill.But anyway, congrats on getting it below the 40k mark. When you get it all paid off, I know I'll be willing to chip in for the celebratory bubbly. ;)-Devin
Wow! Thanks for all the good wishes, everyone!The big bill represents about 10 years of my charming husband getting paid on 1099s and not getting around to filing his returns. Fortunately he has a multitude of compensating qualities! He fessed up to the situation the day we met, and got all the returns filed and the payment plan in place before we got married 2.5 years ago. I am VERY VERY VERY proud of him for getting the mess cleaned up! And you're all right -- when this puppy bites the dust, it is gonna be the happy dance to end all happy dances!
getting paid on 1099s Hi 58,How does one get paid on 1099s? I am just curious, I thought everybody gets a W-2...2195501yCongratulations on your tax-bill success!
"our IRS bill has gone below $40,000! $39,918 is still a horrifying number, but a whole lot lower than the $70,000 or so it was when we started out."It is weird for some of us to read of IRS bills that exceed our annual incomes.That is one of the advantages of reading this board . . puts life into perspective.joycets
getting paid on 1099s Hi 58,How does one get paid on 1099s? I am just curious, I thought everybody gets a W-2...2195501y Its a self-employment, contractor type thing. You know, one of those wonderful advantages of being a free & easy make-your-own-hours self employed kinda guy(gal).I'm too much of a wimp to deal with that kind of work in order to work even if I *could* sell some fruit of my creativity.joycets-----state payroll employee since 1902 ---- (or at least it sometimes feels like it)
Hi, 219 (may I call you 219? or maybe 501y?)Only employees get W-2s. He got paid on 1099s because he was working as an independent contractor doing various kinds of electronic installation work. Which made things worse because he not only owed the income tax, he owed the self-employment tax. Argh!!Fortunately he now only works for companies that will consider him a temporary employee and pay him on a W-2. MUCH better, for all kinds of reasons!And thanks for the congrats!mlk58but you can call me mlk... or 58
Hi, 219 (may I call you 219? or maybe 501y?)Sure. 219 will work just fine. After all, that's how my parents used to call me (when I were but a teeny tiny toddler of course)...5501y came later on... Oh sweet, sweet childhood :)2195501y
Fortunately he now only works for companies that will consider him a temporary employee and pay him on a W-2. MUCH better, for all kinds of reasons!W-2s are better if you don't have the discipline to set aside money to pay self-employment and estimated income taxes. But you lose a some of the benefits to being self-employed if you get paid via W-2s.It took me several years (and a few nasty tax bills, but none even close to $70K!) to get a feel for how much to set aside for quarterly payments. Now my rule of thumb is to put at least a third of the money into a separate savings acount for tax payments. If things are going well, I'll put aside 40%, since I'll be in a higher tax bracket.It works for me.
W-2s are better if you don't have the discipline to set aside money to pay self-employment and estimated income taxes. But you lose a some of the benefits to being self-employed if you get paid via W-2s.In our case, it's not just a withholding issue, it's a dollars-and-cents issue. We definitely come out ahead economically with the W-2 because we don't get hit with that self-employment tax bill every year. The self-employment tax is TWICE the amount of employee social security/Medicare contributions, because the employer pays a portion, too.
The self-employment tax is TWICE the amount of employee social security/Medicare contributions, because the employer pays a portion, too. </b.Don't I know it. But it's good to tell this to other people -- having to bear the full burden of that bill is usually one of the biggest shocks to the newly self-employed.
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