Thrift Savings

What is the name of your state? Arkansas

I had to deplete my Thrift Savings with my employer to pay off some bills ($26,000). I had 10% held out for federal taxes. While I understand that I must now pay state taxes as there were no state taxes taken out initially, I still have an enormous amount to pay for Federal taxes. Now this will cause a burden on me, and I am in no better shape than what I was before I used my savings to pay off those bills! Can I claim this extra income over a period of years? If so, what Federal income tax form do I use?

[abezon]

No, you have to pay the taxes. Pay off the state first. State revenue dept are much harder to deal with than the IRS. With the IRS, send them money every time they send you a letter asking for payment. Interest will accrue until the money is paid in full. DO NOT sign an installment agreement. They'll charge $47 and cancel it if you miss $1 or are 1 day late. If you just send them money everytime they ask for it, you'll have an 'installment agreement' without the cost.