Need advice… $20k tax debt and feeling lost

Seeking Advice
1

i’m 27, have about $2.5k to my name, a car, and $13k in student loans + family debt. just moved back home to hit reset.

i’m in deep with tax debt. i already owe $13k, and after filing for 2024 and 2022, i’m guessing i’ll owe around $20k total. this all happened because i didn’t know what i was doing and made dumb choices. i feel embarrassed even posting this.

2021 was my first year filing as 1099. before that, i was always W-2 and filed every year since 2015. i was stripping in 2021 and wanted to be “responsible” by reporting my income. without knowing about write-offs (i had a ton), i added up my deposits, filed by myself, and reported $52k. i ended up owing around $7.8k. my savings were awful, my spending was worse, and i had no idea self-employed people had to set money aside for taxes.

got on a payment plan in july 2022 for $150/month but stopped in november 2022. honestly don’t even know why.

i quit the club in 2023 and started cutting hair at a barbershop as a contractor (didn’t even know what contractor meant until three weeks ago… i’ve been calling my guy my boss). never filed for 2022 because i was overwhelmed and figured it wasn’t urgent.

fast forward to 2024, i finally got an accountant, filed 2023, and started taking things seriously. after write-offs, i made $36k and owed around $3k. when he asked about 2022, i panicked and said i was unemployed to avoid dealing with it. obviously, that was a mistake.

i restarted my $150/month payments in august 2023 and haven’t missed one since. but my balance keeps growing—$1.8k in interest alone. in 2024, i made $48k, and i’m expecting to owe about $5k since i didn’t have many expenses to write off. for 2022, i deposited $48k in cash, but with deductions, i think i’ll owe around $3k.

now it’s all hitting me at once, and i’m panicking. i doubt i qualify for relief since i live at home and only pay $100 in rent. i’ve been obsessively trying to educate myself since moving back. stayed up till 5 am last night digging through every bank statement from 2021 and 2022, trying to find ways to amend my returns, but it won’t put much of a dent in what i owe.

what should i do next?

2

i owe around $120k in taxes. no real advice except—get this handled now, because the irs always wins :handshake:

3

Pace said:
i owe around $120k in taxes. no real advice except—get this handled now, because the irs always wins :handshake:

appreciate you sharing that. i bet it’s reassuring for a lot of people here to know they’re not alone.

4

Pace said:
i owe around $120k in taxes. no real advice except—get this handled now, because the irs always wins :handshake:

do you make good money? i’m in a similar situation, but my income is low and i have no assets. my business crashed overnight, and i made some really bad decisions.

5

@Cameron
i make decent money but have two dependents, no house, no savings, and no retirement. my total debt (including taxes) is way more than i make in a year.

6

Pace said:
@Cameron
i make decent money but have two dependents, no house, no savings, and no retirement. my total debt (including taxes) is way more than i make in a year.

i get it. got diagnosed with adhd at 43 and now i’m trying to fix my life… wish i figured this out sooner :man_facepalming:

7

Pace said:
i owe around $120k in taxes. no real advice except—get this handled now, because the irs always wins :handshake:

120k??? wow.

8

Oli said:

Pace said:
i owe around $120k in taxes. no real advice except—get this handled now, because the irs always wins :handshake:

120k??? wow.

years of bad decisions and thinking taxes weren’t a big deal. started taking it seriously when my kid was born… but so far, i’ve failed at every attempt to fix it. probably gonna end up filing for bankruptcy.

9

@Pace
i went through bankruptcy and had most of my tax debt wiped out. it wasn’t as bad as i thought. wishing you the best.

10

the good news? you can fix this. the bad news? it’ll take time, and you probably owe penalties too.

since you already have an accountant, be honest with them about everything—every year, every unpaid balance, all of it. they can help you figure out the best way forward.

from there, they’ll either (1) work out a new payment plan with the irs or (2) tell you to get a tax lawyer.

you might need to file amended returns for past years if you missed deductions, which could lower what you owe. this convo won’t be fun, but it’s necessary. once you get on an updated payment plan, just focus on paying it down and not falling behind again.

11

@Fin
so my payment plan is $150 a month, but does that cover everything or just my 2021 balance? i’m worried they’ll come after me for not paying in full.

12

Oren said:
@Fin
so my payment plan is $150 a month, but does that cover everything or just my 2021 balance? i’m worried they’ll come after me for not paying in full.

if you haven’t filed 2022 yet, the payment plan doesn’t cover that. once you file, you can ask them to roll that balance into the plan.

steps:

  1. meet with your accountant and lay everything out.
  2. file any missing returns.
  3. once the irs processes them, request an updated payment plan.
  4. make your payments on time—no exceptions.
13

don’t be embarrassed. they should have taught us this in high school instead of y=mx+b… still haven’t used that.

14

Yan said:
don’t be embarrassed. they should have taught us this in high school instead of y=mx+b… still haven’t used that.

right??

gov: you have to do your taxes every year.
me: ok, how do i do that?
gov: figure it out, but if you mess up, we’ll fine you.
me: that’s not fair. at least give me a list of all the rules?
gov: lol nah.

15

don’t stress too much—this happens to a lot of people.

if you can afford it, a tax lawyer might be a good idea. if not, call the irs directly. they’ll work with you as long as you’re trying to make payments.

16

call them and negotiate. showing you’re trying to pay will help.

17

the irs is more chill than people think. they just want to get paid. if $100 a month is all you can afford, they’ll probably be fine with it.

18

you let this build up over years, so fixing it won’t happen overnight. work on making more money, cutting expenses, and chipping away at it little by little. just don’t ignore it—tax debt doesn’t go away on its own.