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VAer
Level 3

What if you owe IRS money and don't have money to pay tax on capital gain?

It is just an example: if your 2021 salary income (no other income) is $140k, and if your 2022 salary income is $150k and capital gain is $200k, so your 2021 total income is $140k and your 2022 total income is $350k. But you don't pay any estimated tax on capital gain, since your 2022 salary tax withholding is already more than 2021 tax, so there will be no underpayment penalty. Unfortunately, you lost all the money in early 2023 before filing tax return. 

 

For such an example, you will owe IRS money (mainly tax on the 200k capital gain), but you don't have money to pay the tax. What should you do? Can you request IRS for later payment (like a loan, monthly payment)?

 

Particularly for early 2000 stock market collapse of dot-com bubble, there must be many people making a lot of money in 1999 but lost a lot of money in 2000 before filing tax return

 

Thanks.

 

 

 

3 Replies
Bsch4477
Level 15

What if you owe IRS money and don't have money to pay tax on capital gain?

VAer
Level 3

What if you owe IRS money and don't have money to pay tax on capital gain?

@Bsch4477 

 

Thanks.

 

 For long term payment plan, it is for less than $50k only?  What if long term payment plan for a lot more money?

I don't understand: why short term payment plan is for less than 100k while long term payment plan for less than 50k? If owing more money, it will take longer to pay off.

Online payment plans include:

  • Short-term payment plan – The payment period is 120 days or less and the total amount owed is less than $100,000 in combined tax, penalties and interest.
  • Long-term payment plan – The payment period is longer than 120 days, paid in monthly payments, and the amount owed is less than $50,000 in combined tax, penalties and interest.
Mike9241
Level 15

What if you owe IRS money and don't have money to pay tax on capital gain?

make sure to file 2022 timely and request a payment plan at that time 

https://www.irs.gov/payments/online-payment-agreement-application 

or you can try for an offer in compromise

or you can try an for an offer in compromise 

 

 

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