I’m so Stressed Over Having to Pay the IRS


Dear Steve,

I’m a very long time followers and you’ve helped me out numerous time both in answers to my direct questions as well as the general information. And I was hoping for one more time.

This is not directly about debt and I’m hoping to keep it this way as you will see below. Hopefully you can help with not just how to get out of debt but, also, how not to get into debt.

I’m in Real Estate brokerage. In 2015 I’ve made substantially more money in previous years – close to $90k. Now, this number is somewhat misleading as there were quite a few deals that have been going on for few years and happened to close in 2015. As a matter of fact, the biggest deal that resulted in a commission of around $25k, was one that I worked on and off for about 10 years!

Since I’ve never made so much money in real estate, I never bothered with pre-paying estimated taxes during last year. In previous year between me, wife and 2 kids (now 15 and 24) I had to pay very little at tax time and, in most years received a refund.

Long story short:

1. I have to pay close to $15k in taxes. Already wrote a check for NYS ($2K+) and now have to pay about $12k to Fed. I don’t have that money. Most of the money I made last year (that was left after living expenses) went to cover credit card debts with a little bit return to the very little saving account we have). Does it make sense to borrow money on credit cards (fee, interests and all) to pay taxes? Doesn’t make sense but I have no idea what’s my other options.

2. Going forward, my accountant wants me to pre-pay estimated taxes. He gave me pre-printed vouchers for 3 times a year payments of $4k to Fed and $700 to NYS (times 3 each). Again, this is not money that I have – certainly not with first payment that’s due 6/15. Again, I’m short of ideas how to make this work other than to borrow money on credit card (if I can even due that) – that doesn’t seem to make sense.

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Wouldn’t it make more sense that with every commission payment I make I put away a certain percentage in a different account to secure for taxes? I already took 35% from the only commission I’ve received thus far this year ($800) and put it in a saving account.

Please help me Steve, I’m overwhelmed and desperate.

Thank you so much in advance,


Dear Jessy,

Thank you for being a longtime follower. It’s always my honor to assist.

Tackling the past taxes can be straight forward. While you could apply for a debt consolidation loan, you might just want to use the IRS online installment payment option. That would be the least expensive option and not have you building cash advance balances or debt on more expensive credit cards. Last time I checked, the IRS interest rate for these payment plans was around the 6 percent range.

As far as paying estimated taxes, the approach your accountant gave you is acceptable but you might just want to look at using a payroll service to pay you bi-weekly or monthly and automatically pay your withheld taxes in to both the federal and state governments. This way the monthly tax obligations are already on the way. I find it just gives an additional level of peace of mind. It’s what I elect to do.

You can talk to your accountant about what the appropriate withholding amount should be since you project a lower income this year. The goal would be to not overwithhold so you can keep more money in your pocket on a monthly basis.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

Steve Rhode

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