IRS-How do penalties and interest work?

iVillage Member
Registered: 02-03-2005
IRS-How do penalties and interest work?
1
Mon, 08-14-2006 - 6:58pm

Okay, so DH and I owe money to the IRS. I got the bright idea one year to work two jobs in order to catch up our bills, which I did for almost a whole year (and don't recommend) but apparently took out FAR too little in the way of taxes. At the time I was married but my w-2 said single and 0 dependents plus 50 per paycheck extra so I thought I'd be covered...WRONG!

At the end of the year, DH and I owed almost $8000!! which we could not pay seeing as how we had been barely making ends meet as it was....

Anyhoo....I've been paying $150/month, and talked to an IRS representative today and asked him at the current rate how long will it take to pay off the balance...he suggested we pay more...

So, I asked him how much are penalties and interest and he said up to 25% of the total yearly.....at that rate, we'll NEVER pay it all off...

Does anyone know how they calculate so I can tell how much I need to pay? I went to the IRS website but couldn't find anything there....

Thx!

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iVillage Member
Registered: 10-11-2005
Mon, 08-14-2006 - 8:01pm

I wish I could help you out, but it doesn't really sound to me like you did anything wrong?

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