what happens file but know i will owe IRS taxes for the 2010?

[h8debt]

We are thinking about filing.. but we usually owe the IRs taxes when we do out our taxes. The lawyers said the back taxes for 2009 they would roll into the plan. We are allowed to exempt a paycheck here and there and change it back to zero (weekly) Most companies dont allow this but ours does. We have been doing it just to get by. Our laywer didnt "get" it when we said we will owe $ next year if we file now.. We can add contributions weekly in our check. Does the trustees see contributions from your check to the FED/STATE? Does any one know what happens? or What should we do now? I dont want to be stuck with a new bill while we are on the plan... Thanks for all the help just trying to get prepared the best we can before we start the process!

[starr4law]

Yikes! You need to change your withholdings to an amount that will cover your tax debt and leave it alone. Two reasons - creating new debt in a Ch 13 can lead to dismissal and will certainly lead to having to amend your Plan, and you need to show a "true picture" of your expenses in your means test - this means showing adequate withholdings.

Finally, it is likely that a trustee will not even confirm your plan if you cannot prove at the 341 that you are appropriately withholding.

Figure out the number, make that your withholding number and leave it alone.

[SMinGA]

You will need to adjust your withholding - to cover the shortage for this year so far so that you do NOT owe when you file for 2010. Then you'll need to adjust withholding levels again at the beginning of 2011 so that your 2011 taxes are withheld correctly for the entire year.

Adjusting tax withholding to have more money now - and owe the IRS later - is not a good idea as you're now well aware. If there is ANY way you can wait til January 1st or later to file, I'd suggest doing that. Changing your withholdings now & again in 5 1/2 months means your DMI will change, and so your plan will need to change. (You'll need to withhold at a higher rate for the rest of 2010 to make up for not taking out enough for the part of the year that has passed - your DMI will be lower as a result for the rest of 2010. Don't expect the trustee to let you use that DMI for the entire plan.)

If you can wait to file, then just change your withholdings to what they should have been all along. You'll owe some for 2010, can include that in your plan, and your withholding will be correct for your DMI and future tax years.