A while ago, I mentioned that there was a mistake on our 2005 taxes. After fixing it, it showed that we owed over $2,000 to the IRS. I sent as big of a payment as we could at the time (a little over $600), filed the amended return and waited for the official word from the IRS about penalty and interest.
Well, we got word. The total owed is a little over $1,600 and that’s about what I thought it would be. I am also pleased that the interest rate is at 8%. While not the best rate (the best rate is 0%, of course 😉 ), I can live with that.
I still haven’t received information regarding the payment plan that I wanted in place for the debt. I am hoping that information will arrive soon so we can start paying on it. The thought did cross my mind to use a balance transfer check to pay it in full, but I still have that feeling to hold off on doing any balance transfers for a little bit.
The big question is whether I should include it in our credit card debt total. Technically, we are paying back part of a refund that we received. That refund went towards our credit card debt. In a way, I probably should add it back into our credit card debt total. The other thing I could do is track it separately with my NetWorth IQ profile. I still have to think about it some more.
I’m actually glad the bill arrived, because now that we have concrete numbers, I can plug that into a debt reduction calculator and gauge how we are progressing. While this added debt will set us back a little bit, I’m not about to give up trying to meet our goal date of May 2009.
Start paying it, you don’t need their payment plan yet. Calculate a reasonable time frame for paying it off and start putting the money aside. When you get their payment plan, if you are paying too little up the payment, if you are paying too much just keep paying what you already are, and of course make a big first payment since you’ll have some already set aside.
The payment plan is supposed to automatically withdraw the funds every month on the day that I designated. I submitted all the paperwork, now it’s a matter of waiting for when they start taking the funds.
I might send something to them shortly depending on our cash flow. I have an official remit form with the noticed I received. I feel better having something like that to include with my payment so it is properly applied to that debt. I really didn’t want to pay anything until I had something to send back with the payment.
Oh I feel your pain I just got a letter in the mail from the IRS saying I owe ($198) while nothing compared to the handsome sum they said you owe its still stinks because I was doing so good this month on staying ahead of bills……
Hi Tricia, I say – do nothing. Which is odd for me, I am a true believer in paying the government first. The only problem with this, at this point is, if they have already begun moving your paperwork for AWD’s and you send in the payment – you are going to be hit 2 times. Remember, no 2 people in the IRS talk or share information. Your only option at this time is to wait.
Of course, you could call the number provided on the notice, sit on hold for a few hours – hopefully your home phone has a speaker phone (no crink in the neck) and ask them to check and verify that your payment plan has been accepted or is being processed.
Don’t do anything till you know – let me tell you about headaches if they get your payment and have AWD’s going. It will take you months to get your money back.
Bummer… but glad to see that you’re not giving up your quest for debt-freedom!
One quick thing… Have you considered putting the entire balance you owe them on a credit card or taking out a loan from a local bank or credit union? Personally, I’d rather owe citibank or bank of america instead of Uncle Sam…
I’ve been paying the IRS in installment plans for years. You can set everything up over the telephone and it is automated. I’m paying $200 a month, but usually I double that. I really don’t like the IRS withdrawing from the bank account. I send the check every month on the day it is due. As long as it is postmarked on the actual day due you are fine. As long as you debt is under $10,000 you can set up your own payment. I’ve sent it to many different addresses and still get credit even it is the incorrect one AS LONG AS THE POSTMARK IS ON THE DUE DAY.
Thanks for sharing. I included your post in today’s (Aug. 6) Carnival of Taxes at http://dontmesswithtaxes.typepad.com/dont_mess_with_taxes/2007/08/tax-carnival-21.html