last yr I was a w2 employee, made a good buck the first 6 months of the year, and left job (was going to be let go due the economy/firm, so left on my own to get a jump on others in the job market) I always go exempt for that reason, if I go exempt I will have more cash around if something happens (thank god I did) vs paying into the tax system on a monthly basis Im a single male with next to nothing in tax write offs, (rent too) I owe the IRS money for 2008, (just filed) I always see these adds or hear about settling with the IRS but Im was a w2 guy, how does settling work? or is it more towards business owners? is it worth it only if the amount is huge? worth it at 10k? 15k? 25k? 100k<? ? (paying lawyers and dealing with the IRS etc) any first hand info would be great, I would like to lower my amount owed if all possible thanks
I doubt they are going to settle with you over last year's taxes. Your best bet is to work out a feasible payment plan with them and try and pay this off as soon as possible. You will pay much more in the long run trying to play games with them. BUT if you don't believe me you can always call those tax relief companies always on TV. Look how much they saved their clients. I'm sure it would work for you too and you can pay them pennies on the dollar for just one phone call.
A prudent way to lower your tax due is to open an IRA or SEP IRA and make the max contribution, then work out a payment plan for the balance, ideally no more than 18 months.
The biggest drawback to a payment plan with the IRS is it doesn't shield you from their penalties and interest, which is rather high speaking from past experience). Pay in full by April 15th or you will pay more, even if it is a day late. Borrow from a relative if you have to, work out a payment plan with them, it will cost you less in the long run.
I agree that the best approach is to pay it off all it once if you can. I don't think you pay penalties if you work out a payment plan with them in advance (I could be wrong) but you will pay interest of course. Good luck to the OP I think that you will be happier in the long run if you get it over with now. edit: I was wrong, you do pay penalties as well plus interest with a payment plan.