Please help me. I started booth renting this year and did not realize that I would have to pay my taxes in one big chunk. I don't have the money and I owe over $6,000. Am I going to jail?
LMA
You aren't the only one with this problem. Many, many new booth renters don't realize that there is no withholding so they owe tax. I hate to be the bearer of bad news, but you should also be making your first quarter estimate on 4.15. People that do not have withholding are required to estimate their taxes and then pay one forth on April 15th, June 15th, September 15th and January 15th.
Regarding your current problem, I have good news. If you cannot pay the tax due for 2007 by the October 15, 2008, extension date, you should file your return and attach Form 9465 to request an installment arrangement.
If you owe $10,000 or less and certain conditions are met, the IRS must enter into an installment arrangement if you request one. You must show that full payment cannot be currently made, and that in the previous five years you filed income tax returns and paid the tax, and did not enter into an installment arrangement during that period. If the current return is a joint return, your spouse must also meet these tests for the five-year period. You must agree to pay the tax liability within three years.
If you are using an installment agreement to pay the tax due on a timely filed return (including extensions), the late payment penalty is reduced by half from .5% to .25% per month.
Let me know if you have any other questions.
Larry Kopsa CPA
LMA
You aren't the only one with this problem. Many, many new booth renters don't realize that there is no withholding so they owe tax. I hate to be the bearer of bad news, but you should also be making your first quarter estimate on 4.15. People that do not have withholding are required to estimate their taxes and then pay one forth on April 15th, June 15th, September 15th and January 15th.
Regarding your current problem, I have good news. If you cannot pay the tax due for 2007 by the October 15, 2008, extension date, you should file your return and attach Form 9465 to request an installment arrangement.
If you owe $10,000 or less and certain conditions are met, the IRS must enter into an installment arrangement if you request one. You must show that full payment cannot be currently made, and that in the previous five years you filed income tax returns and paid the tax, and did not enter into an installment arrangement during that period. If the current return is a joint return, your spouse must also meet these tests for the five-year period. You must agree to pay the tax liability within three years.
If you are using an installment agreement to pay the tax due on a timely filed return (including extensions), the late payment penalty is reduced by half from .5% to .25% per month.
Let me know if you have any other questions.
Larry Kopsa CPA
