So I get home and the wife says she’s got bad news: A letter from the IRS saying we owe $4,000 on our 2018 taxes.
Apparently, she sent all the right paperwork to our tax preparer, but when the preparer returned the completed forms she forgot to include one. My wife failed to check that and signed the return (and got me to sign off, trusting her) and sent it off.
So here we are. My wife is afraid I’m going to divorce her. (I’m not.)
Anyone have an experience like this? Do we have any recourse? That 4 Grand could buy a lot of Super Bowl swag. [Reply]
Originally Posted by scho63:
WRONG as wrong can be. :-)
If you make a deal with the IRS they will MANY times remove entire years of penalties and interest. I know personally as I got my 6 years of past due Fed Taxes reduced to 18% of what the total was.
Reducing your overall tax burden isn't the same as completely eliminating or rescinding Interest Due.
I have many family members that are accountant and/or CPA's. Never once has the IRS rescinded interest, for any reason whatsoever, for any of their clients.
Penalties? Yes. Interest? No.
Others who are tax accountants and/or CPA's have chimed in this thread and have verified that the IRS will not rescind interest.
When will the IRS eliminate the interest? The IRS may remove your interest if:
1. The IRS made an arithmetic error.
2. An IRS employee made a mistake or caused a delay.
For example, if an IRS employee lost your case file during an audit, the IRS may remove the interest that built up during the delay in completing your audit. [Reply]
Originally Posted by Spott:
They also cleared it for my wife when our CPA fucked up her taxes before we were married. She ended up getting a refund after initially owing over 100K in taxes as well as getting the interest rescinded. In her case, she sold a house for over 400K and for some reason the CPA screwed up and the entire proceeds of the house was shown as income. She actually sold the house for less than she bought it for and had to bring like 8 grand to closing to pay off the loan. So instead of paying capital gains tax on 400 grand, the amended return cleared the balance and actually gave her a refund. But it was still a royal pain in the ass dealing with the IRS and the CPA.
No offense, but did she even read her tax return?
I mean, holy shit, if my accountant listed my income as $400,000 dollars more than I earned, I'd hop on the phone immediately.
There's no freakin' way I'd sign the return and allow it to be filed. [Reply]
Originally Posted by DaneMcCloud:
Reducing your overall tax burden isn't the same as completely eliminating or rescinding Interest Due.
I have many family members that are accountant and/or CPA's. Never once has the IRS rescinded interest, for any reason whatsoever, for any of their clients.
Penalties? Yes. Interest? No.
Others who are tax accountants and/or CPA's have chimed in this thread and have verified that the IRS will not rescind interest.
Again, the IRS, not the state.
Well they are wrong because I got reductions on EVERYTHING including parts of Interest and Penalties.
It didn't go to zero but it was a far cry from the starting amount. [Reply]
Originally Posted by Mennonite:
This seems like terrible advice. You're basically giving the government an interest free loan in exchange for what exactly? You end up paying the same amount in the end, and you could have used the income you prematurely forked over to invest in something that could have actually made you money.
I always despise this take. Yes, it's technically true, but unless you are overwithholding by thousands, you're losing like $20 in the interest at most. That's well worth it to avoid the possibility of big bills come tax time for many. [Reply]
Originally Posted by DaFace:
I always despise this take. Yes, it's technically true, but unless you are overwithholding by thousands, you're losing like $20 in the interest at most. That's well worth it to avoid the possibility of big bills come tax time for many.
This guy gets it.
Unless you are leveraging as much money as you can day trading in the stock market, the "interest" amount you may miss is negligible for almost everyone. I always end up with a small return each year (This should be most people's goal as breaking even is tough to calculate). It's WAY better than owing any amount of money. [Reply]
Is Interest Relief Available?
The IRS doesn’t abate interest for reasonable cause or as first-time relief. Interest is charged by law and will continue until your account is fully paid.
If any of your penalties are reduced, we will automatically reduce the related interest. See our Interest Overview page for additional interest information.
Originally Posted by DaFace:
I always despise this take. Yes, it's technically true, but unless you are overwithholding by thousands, you're losing like $20 in the interest at most. That's well worth it to avoid the possibility of big bills come tax time for many.
And I despise people so foolish that they can't handle their basic household finances and let the government hold their hard earned money with no ROI.
Why not just tell the dude to stick his money in a Mason jar in his backyard? [Reply]
Originally Posted by DaFace:
I always despise this take. Yes, it's technically true, but unless you are overwithholding by thousands, you're losing like $20 in the interest at most. That's well worth it to avoid the possibility of big bills come tax time for many.
The other side of it is that only applies if you would have saved the money. If you would have just spent it on bullshit consumables anyway, it’s a net gain. I know that’s not shot people want to admit on the internet, that they are incapable of saving but it affects a lot of people.
Originally Posted by Mennonite:
And I despise people so foolish that they can't handle their basic household finances and let the government hold their hard earned money with no ROI.
Why not just tell the dude to stick his money in a Mason jar in his backyard?
I hate to break it to you, but you despise a giant swath of the population.
After doing it awhile it is remarkably how otherwise normal and in some cases truly successful people have virtually no handle on business.
It’s one thing to suggest that it is dumb to take that approach. But to just stick your head in the sand and pretend that it doesn’t improve a massive amount of people’s lives is just incorrect.
I’d bet you’d be surprised how many of your friends and neighbors are incapable of doing what you suggest. [Reply]
Is Interest Relief Available?
The IRS doesn’t abate interest for reasonable cause or as first-time relief. Interest is charged by law and will continue until your account is fully paid.
If any of your penalties are reduced, we will automatically reduce the related interest. See our Interest Overview page for additional interest information.
Originally Posted by DaneMcCloud:
No offense, but did she even read her tax return?
I mean, holy shit, if my accountant listed my income as $400,000 dollars more than I earned, I'd hop on the phone immediately.
There's no freakin' way I'd sign the return and allow it to be filed.
I don’t think she did. She was just used to handing over her returns to her CPA (who turned out to be worthless). To her defense she basically has two full-time jobs as both an attorney and a college professor, and didn’t have a lot of free time to do her taxes. When she dealt with the IRS, her account was being serviced by a special department due to the large amount, so it was a little easier to get in touch with someone and get things straightened out.
I received a similar letter that the OP did from the IRS a couple of years before because I made an IRA withdrawal and it wasn’t taxed. They made me pay that interest, but it was a real pain in the ass getting in touch with anyone at the IRS. None of the departments communicate with each other, so the department that sends out the notices doesn’t know that you’ve already paid the bill for a couple of months which caused me to continue to get notices after I had paid the money back (with interest).
I handle the taxes for us now and things are going much smoother now (knock on wood). [Reply]
