I Took Money From My IRA and Now Owe the IRS. I’m So Scared. – Angela

“Dear Steve,

Hi. I’ve never had any problems or issues with the IRS until 2011. I resigned from a company that I worked for 11 years due to illness. I rolled over my 401k approx 60k to an IRA local bank.

After recuperating, I was unable to get a job, unemployment was still high. Anyway, since I was renting, I withdrew money from my IRA to pay for rent, food, insurance, even part of the hospital bill.

I used to take a train to work, before but now needed a car to be able to go for interviews and employment agencies, so I bought a used car for about 18k.

Anyway, I really had no clue I had to pay taxes on money I had saved up, and was using it at my time of need.

Now, I’ve received a tax bill of 31k. I almost fainted. I’m still unemployed but worked sporadically last year, still had to supplement my income especially for rent.

Now I’m really scared, really don’t know what to do, lie awake at night with my heart pounding in my chest and migraines. I don’t know who to turn to for help. IRS says I have 30 days then 90 days to respond. Any help will be greatly appreciated.

Where can I get help and what are my options?


stressed-woman narrow

Dear Angela,

I understand what that fear and panic can be like. Not fun.

The IRS offers installment payment plans for up to 72 months. It might just be the solution you are looking for. They will take into account your income. If you are unable to pay the tax bill within the 72 months, then they the Offer in Compromise program might be more for you.

Here are a couple of helpful links.

I think this other post will be helpful as well. See Owe The IRS? Here Are Eight Awesome Insider Tips to Make it Less Painful and Cheaper.

See also  How Do I Reduce My IRS Installment Payment if I Can't Reach the IRS?

I’m confident if you follow the advice and links here you can find a solution.

Please post your responses and follow-up messages to me on this in the comments section below.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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