I'm so screwed I don't know what to do. I made 21k in 1099 income and turbotax is telling me that I owe over $2,000 in self-employment federal taxes. That is more than I currently have in my bank account and I've taken every deduction I can. I'm so scared, I won't have any money to live and even if I do a payment plan the tax debt will just keep piling up. I'm terrified.
I owe over $2k in taxes as a self-employed individual and I can't pay, what do I do?
byu/malsen55 intax
Posted by malsen55
6 Comments
Pay what you can. Do a payment plan. It’s not a credit card. The IRS isn’t going to keep you in debt.
And start saving money for taxes for 2026 if you continue to have self excitement income.
File the return with no payment. They will send a notice. Then ask for payment plan online. It is automatic.
The most important thing to do is to file your tax return by April 15th, even if you don’t make a full payment. Pay what you can. The IRS charges only 6% interest on unpaid balances, so even if you made no payment at all for a while, you would be charged only $10 per month in interest. If you paid $100 a month, you’d have your tax debt paid off in under 2 years.
The reason that I stress filing your return on time is that filing on time, even if you don’t pay the full balance, avoids the failure to file penalty of 5% per month on the unpaid balance, up to a maximum of 25% of the unpaid balance. If you file over 60 days late, the penalty for failure to file is the lesser of $525 or 100% of the unpaid balance.
It’s a lot cheaper to file and get a payment plan than not to file.
Payment plan process is super easy
What all have you included for your schedule C expenses? Do you drive your car, have an office space in your home, subscribe to a newspaper, use a printer, use your phone? Expenses may not add up to a lot but they can help lower your net income.
The interest rate on a payment plan is pretty low, and the payments are meant to be affordable based on your income.
It might take a couple of years if your business is really struggling. But in the long run $2k isn’t all that much. If your income doesn’t improve by that much, then you need to consider taking a different job.