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

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.

I was severely disabled for most of 2010 and earned absolutely no income. I collected approximately $35,000 through an employer-sponsored private disability plan, which was considered taxable income because my employer, for whom I worked my a** off for many years, was too cheap to give their employees the opportunity to pay the relatively small group disability premiums themselves with post-tax dollars (they had the choice to either give their employees the tax break or pay the small premiums themselves, thereby taking a corporate tax deduction and making any employee disability benefits taxable to the sick employee). Since I had two kids in college, I had no choice but to take an early distribution on my 401(k) in order to pay two college tuitions for kids who will probably graduate to find no jobs available. The tuition is not something I am complaining about because I would do anything to give my kids the slimmest chance of success in the future, but the overall theme is just disgusting.

A person who worked hard, earned a decent income and paid more than her fair share of taxes for more than 20 years, all the while never turning down a chance to help other people in need, finds herself in a situation where she owes Uncle Sam $36,000 because she was too sick to work (and believe me, almost half of that disability money went toward paying COBRA insurance premiums and the remaining money went toward uncovered medical expenses) and had no choice but to take money from her retirement savings to pay her kids' tuition so they wouldn't be kicked out of school.

Don't get me wrong - I know there are plenty of people who, in my situation, wouldn't have had disability benefits or retirement savings to fall back on, but that is neither here nor there. I worked hard and paid dearly for those benefits (which in this case is an oxymoron). Had I not worked so hard all those years, the system would have had no choice but to take care of me through public entitlements and the such. My tax dollars went towards supporting many folks in that position when they couldn't help themselves - and I was more than happy to participate in a system that supposedly helped take care of their own - but how is it fair that the same is not extended to me in my time of need? With the inequities of the 1% and a system that is plainly not equitable "to all" in times of need, is it any wonder that we've seen a continuous deterioration of those folks formerly known as the middle class, the true backbone of our society?

Ugh...I'm so sorry timid. I can't imagine.

Viva la revolution.

reply to post by timidgal


Life is a roller coaster indeed, I do hope you overcome this tax issue.

If you haven't already, perhaps you should consider a consultation with a lawyer.

Here's one source that may get you started.

Selecting a Good Consumer Tax Lawyer

The federal tax code is thousands of pages long, full of rules, exceptions to the rules and penalties for violating them. So, you're not alone if you have questions and problems, whether you're dealing with income taxes, estate and gift taxes or an IRS audit.

If your research efforts aren't enough and you realize you need help, selecting a good tax lawyer will make sure your tax problems are handled properly. But where do you start? Here are some things to help you find the right tax lawyer for you.

correct me if I am wrong but if you refuse to pay (because technically Tax Is illegal) You run the risk of going to jail.............................something is sooo wrong with the system

I feel so damn sorry, and yes...angry for you. It makes no sense at all, it's unfair, it's financial, and emotional rape of someone who can least afford it. It's not like you are depending on the government to educate your children. Or feed and house, provide medical benefits for all of you.....

If that were the case, you'd have every right to dig deep into the government pocket with no threats of punishment hanging over your head for using those services. But nooooooo.....you've been a good responsible little citizen. Working hard, paying your own way, and then some to help others. So, you get the ten ton weight held over your head for being in a position to may be not throw another bucket of your hard earned money into the common well...one that is quickly going dry.

Where is the back-up plan for people like you. There isn't one. It's sink or swim, while good old government stands by tapping their foot impatiently, waiting for another bucket of your taxes. It really pisses me off to read stories like yours.

I wish there was something I could do for you, I really do. I hate feeling so helpless. I hate that I can't divert my taxes I pay to help you.

Des

They don't put you in jail for not paying they can't they drum up something else like filing false returns or failure to file. But they will take any assets you own like house car etc. Why don't you call one of those commercials where they say if you owe more then $10,000 in taxes they can settle with the IRS for pennies on the dollar?

The IRS is organized crime! Maybe you thought so called tax protesters were crazy before? If you did you know now they are right!

reply to post by timidgal


Ok you should have talked to a financial consultant.One thing you do is the Obama trick he did giving both his daughter 12000.00 for college fund they wont pay taxes lowers his gross income. But its not to late contact one of the companies that deal with the IRS and they will renegotiate mostly by arguing you filled out your taxes wrong. but theyll save you around 80 percent after fees and IRS is paid.Good luck the IRS is worse then loan sharks.

reply to post by timidgal


get a good tax lawyer and have them look at it.
it's ridiculous for you pay that much money in taxes if you were disabled.
and if you do have to pay the lawyer should be able to get them down to a more agreeable amount.

reply to post by amongus

Sometimes a sympathetic comment helps more than one realizes, amongus. Viva la revolution indeed but where oh where is our fearless leader?

reply to post by UberL33t

That's exactly what I'm doing (at an hourly rate of $350 for the attorney, doesn't it figure)? When my accountant gave me that amount, I screamed "file an extension" and started asking around for recommendations.

reply to post by gaurdian2012
You hit the nail on the head!!

You may want to check into applying for Social Security Disability - I think if you were out of work for over a year you can apply for benefits retroactively - for yourself & your dependents. Would consult an attorney who specializes in SS Disability only!

FYI - check your insurance policy - SS Disability may be an offset to your insurance policy. Which means if you are awarded SS benefits the insurance company may come back after the money they paid to you.

Good luck

Also - SS attorney's work on a contingency basis so you won't have to shell out any money if they take your case.

reply to post by Destinyone

Des,

Your genuine concern and desire that if possible, you wish you could help someone you dont know comes through loud and clear and I thank you for making me feel less foolish for being a good and decent person. I honestly hesitated in writing this thread for fear of sounding like a whiner; knowing that people understand and I'm not a selfish person for being so resentful is extremely heartening and something I needed to hear.

With much gratitude to everyone who responded,
Timidgal

I am sorry to hear that this happened to you. But I would like to also point out that situations like this not only wrek families economically but emotionally as well. I had a similar situation with an insurance company over long term disability. Like the Fed, the only time they move fast is to collect money. They are forever slow when they have to pay.

Take for example a middle age man gets hurt can't work is forced to fight took and nail to get the benefits he rightly deserves. In the mean time he looses his house, his wife leaves him because he is depressed and miserable. Well he then says enough is enough, I have lost everything, He then goes postal on the people in the building of the insurance company because if nothing else he is going to get retribution. For all the wrong that has been done to him.

When something like this happens, everyone is quick to just say "well there is another lunatic" but don't realize that the system is the problem. Personally, I cannot believe that this scenario does not happen more than it does. I know If this happened to anyone of us, (hard working, deserving americans)I am sure retribution would be high on everyones list.

reply to post by hawkiye

Never thought they were crazy as I'm not the first or the last person this has/will happen to. I never took my good fortunate circumstances for granted and always had compassion for those protestors. As I said, mine is merely one example...

arent COBRA insurance premiums

and

uncovered medical expenses

both itemizable tax deductible?

Originally posted by timidgal
reply to post by Destinyone

 

Des,

Your genuine concern and desire that if possible, you wish you could help someone you dont know comes through loud and clear and I thank you for making me feel less foolish for being a good and decent person. I honestly hesitated in writing this thread for fear of sounding like a whiner; knowing that people understand and I'm not a selfish person for being so resentful is extremely heartening and something I needed to hear.

With much gratitude to everyone who responded,
Timidgal

Oh Timid...don't feel foolish. It's the position our own government has put you in, that is foolish. How they have set up such a corrupt and broken system to support themselves, and so many who are not deserving of help.

I wish the best for you. I hope and pray you find a sharp, quick Attorney to put the screws to them, for you.

Keep us posted if you feel like it. I can't help but believe there are many lurkers reading your thread, saying to themselves....damn...I could have written that. You are probably helping a lot of folks in a similar situation, but don't post about it.

You are a good person Timid....

Des

Originally posted by dragonridr
reply to post by timidgal

 

Ok you should have talked to a financial consultant.One thing you do is the Obama trick he did giving both his daughter 12000.00 for college fund they wont pay taxes lowers his gross income. But its not to late contact one of the companies that deal with the IRS and they will renegotiate mostly by arguing you filled out your taxes wrong. but theyll save you around 80 percent after fees and IRS is paid.Good luck the IRS is worse then loan sharks.

Unfortunately, those funds need to be set up before your kids are in college and I missed the boat on that one. With that said, I'm hoping I'll still net some type of savings after my $350/hour tax attorney is done, but that remains to be seen.

id call and ask them to bring me to jail now lol. a free place to live, free food, lots of company, lots of time to meditate. prison seems like guaranteed happiness. freedom is of the mind

reply to post by grey580

Don't get me wrong - I have friends who are lawyers (none that deal with taxes unfortunately) so I'm not a subscriber to the theory that all attorneys are sharks.

With that said, the $350/hour was already a reduced fee extended to the lawyer friend who referred me to the tax attorney. Man, did I choose to go into the wrong profession...