On disability, had a student loan discharged, now can't afford to pay tax

[RUKIDDINGME]

What is the name of your state (only U.S. law)? Minnesota

My husband works, but I will never work again and only earn disability. I had a $56k student loan discharged in 2012 and now, after filling out an insolvency form, I still owe roughly $5k (in combination to both federal and state). My husband and I do not have the money to pay the $5k outright, nor do we have the money to make loan payments from a bank without considerable hardship. Do we have any recourse? Any help would be greatly appreciated, thank you in advance.

 

[tranquility]

Make a request for an installment agreement with the taxing authorities. For that amount, the federal government will accept it if it is paid off before 5 years. Divide the amount you owe by 48 (4 years, you have to figure interest too. Davew128 or others may give a different figure that is a little higher but I forget what it is right now.) and offer to pay that to the IRS every month. Do the same for the state taxes owed.

 

[RUKIDDINGME]

Thank you for your response.

The problem is that we don't have an extra $100 plus to pay in every month to even make the payments, and that's not even including interest. I don't know what we're going to do because it just ISN'T THERE. Ugh.

 

[Proserpina]

The problem is that we don't have an extra $100 plus to pay in every month to even make the payments, and that's not even including interest. I don't know what we're going to do because it just ISN'T THERE. Ugh.

The thing is, you might not have a choice. If you're on SSDI, that can be garnished to satisfy a tax debt.

 

[RUKIDDINGME]

I know we won't have a choice, it just stinks when circumstances beyond your control unravel your life in a few short years to not being able to scrounge up a little over $100/month, but you make just enough to not be eligible for any help. Some days I am so dismayed at the system. *sigh* Thank you for your time today.

 

[OHRoadwarrior]

How much do you expect the government to give you? Geez.

 

[csi7]

I had my student loan debt cancelled in 2012. I went through all the paperwork for the form 982, and worked with taxpayer advocate for three hours to figure out how to properly post the numbers in both the asset and liabilities sections.

I am glad to say that I meet the insolvency requirement for IRS assessment. Most people who are on disability do qualify for insolvency, based upon the numbers for the date of the student loan debt cancellation. I am married, have always filed married, filing jointly.

The fact that you are not able to afford the $100 a month to pay IRS means that somewhere in your form 982, you are missing some numbers in the liabilities section.

I'd call and ask for help with the taxpayer advocate office.

I went through my disability back pay, my two 401ks, the savings, and we are living paycheck to paycheck. Not because I do not want to work, I'm not able to work at gainful employment.

 

[Mass_Shyster]

I still owe roughly $5k (in combination to both federal and state).

Assuming you file your return timely, you may be able to discharge this through a bankruptcy in three years.

 

[tranquility]

There is also an offer in compromise if you truly cannot pay within six years. But, what YOU think you can afford to pay may be different from what the IRS thinks you can afford to pay.

See also:
http://www.irs.gov/Individuals/Collection-Financial-Standards