I owe $36,000 in income tax for a year during which I earned NO income

I'm in the same boat. I had to spend my retirement and now I owe 35% of what I took out. I can't make any money, and they refuse to pay me a dime of unemployment. I'm ready for debtor's prison, IRS jail, or whatever. I guess they just take my house. Hey look on the bright side, you got some disability money and I had a house for awhile.

Originally posted by timidgal
This is one of many perfect examples about what is wrong with the US tax system and how our social and fiscal systems do absolutely nothing to take care of those who support it.

Clearly the problem is that you weren't a private equity hedge fund manager. All would be right with the world if they get to pay even less tax.

reply to post by mbkennel

Yes, these millionaires constantly pay 15% through trickery. People call not using trickery a kind of ignorance. Don't listen to them, for they lack morals. I'll pay what I owe, fair or unfair, that is part of being a citizen.

Posting to reread and return. Thanks for the thread.
2

reply to post by BABYBULL24


A suggestion, check with a lawyer who specifically deals with Disability. They know exactly what all the rules are, and how you need to file. If you have medical documentation proving you couldn't work for that period, then contact one of these disability law firms and see what they can do for you.

TimidGal, I tried to U2U you (?), but I don't know how. If you do, U2U me. I am a tax preparer, and with a little more information, may be able to give you 'tax attorney quality' advice for FREEEEE........

For one thing, you need to look on your 1099R (the 401K distribution form) and see what code they put in for a distribution. Probably it is a 1, which means 'early distribution, no known exception'. HOWEVER, for medical (and I believe also educational [I just got out of work and am a little brain-dead]] you can claim an exception. Now, this won't get you out of paying taxes on that income, but it WILL get rid of the 10% penalty, which is probably socking the heck out of you. Also, you can look into "Offer in Compromise". Once again, the details as they pertain to you are dependent upon your income and ability to pay, but if you go to the IRS website: www.irs.gov and enter "offer in compromise" into the search bar, you should be able to read up on it. $350 for an attorney is highway robbery!!! Hope this helps, and as I mentioned above, I would be more than happy to assist you further.

I owe quite a bit for that 1099-MISC form. If you earn $600 or more, like I do online, you have to pay taxes on what you've earned. What if that is someone's only income? - paying the taxes on the small amount you make online could be a giant lump sum, even a whole paycheck. I wish the minimum was much higher than $600. I won't say how much I have to owe but may face looked like this when I wrote the check today -->
I might have to get some advice from Wu-Tang Financial lol.

Canada

second line.

Yes, mam, I understand your problem. But you made a choice to withdraw enough money to keep those kids in college knowing that you would pay that tax penalty.

I did something similar a couple of years ago when I rushed to dump my stocks without knowing exactly what I was doing. What I paid in taxes that year was equal to what I drew from SS. I'll talk about it to others, but I have no one to blame for my rash action other than myself.

I would do it a bit differently if I could do it over. Namely, I would consult a tax expert first and have a clear picture of what I was setting into play, Perhaps you did something similar before you followed through in supporting your children in the style in which they were accustomed in normal times. In my view, that was your mistake.

I call BS on this entire thread, there have been some good recommendations and good comments, but I do taxes for a living, and the title of the thread and the OP's comments have been total disinfo. COBRA, Tuition, and regular medical expenses are deductable, beyond the 7.5% requirement.

A really good "OMG, Lets get people fired up chain", but total BS. And no I do not work for one of the chains, my boss and my coworker are both CPA's.

Sorry, someone needs your money to pay for all those poor banks...and to subsidize "poor" companies like Exxon. They need it more than you, don't you agree? Don't forget: "corporations are people my friend!"

reply to post by MrXYZ


Illegal aliens need their College education funded as well! Alot of Nations need Foreign Aid. Afganistan and Iraq need to be rebuilt. Lazy no good bums need their welfare checks. Women need government funded abortions. Doomed solar companies need to be funded. AK47's must be purchased and sent to Mexico. The secret service needs whores. How is it that you can be so heartless? $heopleNation

Originally posted by SheopleNation
reply to post by MrXYZ

 

Illegal aliens need their College education funded as well! Alot of Nations need Foreign Aid. Afganistan and Iraq need to be rebuilt. Lazy no good bums need their welfare checks. Women need government funded abortions. Doomed solar companies need to be funded. AK47's must be purchased and sent to Mexico. The secret service needs whores. How is it that you can be so heartless?

$heopleNation

OR you could read the thread and realize this woman took out TONS of money from her 401k which is what she is being taxed on, which is totally normal.

Sorry to get in the way of your rant against immigrants which has no bearing on the thread whatsoever.

Originally posted by stanguilles7

Originally posted by SheopleNation
reply to post by MrXYZ

 

Illegal aliens need their College education funded as well! Alot of Nations need Foreign Aid. Afganistan and Iraq need to be rebuilt. Lazy no good bums need their welfare checks. Women need government funded abortions. Doomed solar companies need to be funded. AK47's must be purchased and sent to Mexico. The secret service needs whores. How is it that you can be so heartless?

$heopleNation

OR you could read the thread and realize this woman took out TONS of money from her 401k which is what she is being taxed on, which is totally normal.

Sorry to get in the way of your rant.

Exactly.

Saving for your future is the tax benefit you get when putting in.
The penalty is the warning shot that you need to keep it in there.

As discussed in some of the prior reply's, all of the medical cost's are deductable. And don't feel bad. the State of Cal. STOLE $3500.00 from me about a month ago stating it was back taxes on my wife's projected income from 2005 when we lived in Cal. Well although my fife obtained a nursing Lic. she never took a job / never worked while we were there. We had to PROVE she didn't work in Cal. before we finally got our $$ back. What a sham.

Good luck and yes use a CPA and not any of the drug store tax services.

Click here for more information.

Originally posted by SheopleNation
reply to post by MrXYZ

 

Illegal aliens need their College education funded as well! Alot of Nations need Foreign Aid. Afganistan and Iraq need to be rebuilt. Lazy no good bums need their welfare checks. Women need government funded abortions. Doomed solar companies need to be funded. AK47's must be purchased and sent to Mexico. The secret service needs whores. How is it that you can be so heartless?

$heopleNation

And all that pales compared to all the corporate welfare and trillions the banks received.

Click here for more information.

401k distribution - 80000
taxable disability - 38000
AGI 118000 (7.5%=8850)

Itemized deducts (9150) minimum
(Medical using your figure of 1/2 of your disability paid out in COBRA payments + any copays, out of pocket, rx(18000 - 8850 = 9150))

Exemptions 2 (7400)

taxable income 101450

tax on earnings 20130 (17% tax rate)
10% tax on 401k---- zero--- (not applicable since medical over 7.5% exceeds 10% excise tax)
Total tax 20130

And this does not factor in deductions for any state taxes you paid, tuition deductions you are entitled to for amounts paid for your dependent and/or contributions.

1- Fire anyone who told you that you owe 36000.
2- Do not allow an attorney or any other idiot to take this to court making you promises to challenge the taxability of either of these items. You'll lose.
3- Based on your figures - you owe a maximum of 20130.00 and probably much less. That's 17% and completely reasonable given the income you received that year.
4- Send me a bottle of silver patron and a bag of dill pickle chips


Just my two cents
B

reply to post by MrXYZ


I agree 100%. All I do here is stand against the International Banksters. Don't fall for the divisionist yes men. It's what they do. We all have opinions that vary sometimes but always meet back full circle. ~$heopleNation