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Author Topic: Something good, something bad, hopefully ending ok  (Read 700 times)
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Knightshade Dragon
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« on: April 11, 2013, 03:04:13 PM »

It's been a tumultuous past few days for my family.  Laura went in for surgery on Monday for a Hysterectomy and Oophrectomy.  She's finally home today and resting.  This spells the end of a long-standing issue for her, so it's good that it's behind us.  It's at least one less source of pain for her.   But then.....I did my taxes.   I knew that I'd be seeing a higher tax bracket due to my new job, but what I didn't expect was Laura's student loans.  Due to her disability the bank that held one of her student loans (a shade over $40,000) forgave the loan and expunged it.  Well...what I didn't know is that that "gift" is considered misc. income and that hit me with an additional $40,000 of taxable "income".  This left me with a bill of over $13,000 in taxes to pay this year, effectively wiping us out of every dime of savings.  I find myself filling out "fiscal insolvency" paperwork - not something I'd expected to ever have to do in my lifetime.  I am continuously amazed by the blessings I get every once in a while, but I'm equally amazed at how severe some of these financial 'jack-in-the-box' moments are as well.  I suspect I'll be returning to the site and to this board in a few days when Laura is feeling better, but man....can a guy get a damned break in the mean time? 
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« Reply #1 on: April 11, 2013, 03:36:01 PM »

Damn, that sucks.  Sorry to hear about the troubles.  Here's hoping things start looking up. 
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« Reply #2 on: April 11, 2013, 03:36:54 PM »

Sorry to hear about the finances KD, but glad to hear your wife is doing well after her procedure.
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« Reply #3 on: April 11, 2013, 03:37:47 PM »

It's similar to forgiven mortgage balances.  You don't have to pay back the loan but it is indeed seen as taxable income.

I'm fairly certain you'll be able to establish a payment plan with the gov. so that it's not all due at once...if that helps?

It also couldn't hurt to get an accountant take a look at it...

Glad she's going to be getting better.

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« Reply #4 on: April 11, 2013, 04:05:26 PM »

Sorry to hear about the finances but glad to hear about the health issues getting better.
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« Reply #5 on: April 11, 2013, 04:09:22 PM »

That sucks, Ron. Glad Laura is past the problems and is recovering - and I'm really sorry to hear about the kick in the nuts.

Sounds like you can't win for losing. frown
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« Reply #6 on: April 11, 2013, 04:34:31 PM »

Ron make sure you really look at the insolvency exemption for the debt. It's possible to completely exempt all of that debt income if your debts outweigh your assets.
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« Reply #7 on: April 11, 2013, 04:37:49 PM »

Glad the wife is doing better.  While the tax burden may be a bit rough, you wiped out a 40k  debt.  Over all, you eliminated $27,000 of bad debt without an out of pocket hit and thats a bad thing?  Even if you had to borrow the $13k to pay the feds off,  youre way better off than you were before. I would love me some of that bad luck.  Damn those 1st world problems.
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« Reply #8 on: April 11, 2013, 07:12:00 PM »

Yeah, wiping out your savings? How can that be bad? It's not like there could be an unforeseen emergency on the horizon.

As for Ron, sorry for the money hit, but now that your wife is healing (yay!), you can put her back to work at the salt mines slywink.
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« Reply #9 on: April 11, 2013, 09:23:45 PM »

An unexpected $13K vs. monthly payments is not a small deal, rshetts... it's not like the $40K was due right now.  Suddenly needing to come up with $13K would suck for any of us, I imagine.  Maybe not gellar.

Also, this makes me feel better about the $2K I had to send the feds yesterday.

(And glad your wife is ok.)
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« Reply #10 on: April 11, 2013, 09:50:58 PM »

The bank that wiped out the debt wouldn't give you a loan to pay the taxes? It would have been a win win for everyone.
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« Reply #11 on: April 11, 2013, 10:19:49 PM »

Sorry to hear of all the troubles, Ron.  I sure hope your wife is feeling better soon and everything works out for the best in the long run! I'm sure it's super stressful right now, though!
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« Reply #12 on: April 11, 2013, 11:43:03 PM »

IRS Payment Plans

You can even apply online.

Of course, I don't know the specifics, but I don't like the look of Line 9 (PDF):

Quote
Enter the amount you can pay each month. Make your payments as large as possible to limit interest and penalty charges. The charges will continue until you pay in full. If no payment amount is listed on line 9, or the proposed payment does not meet our streamlined processing criteria, a payment will be determined for you by dividing the balance due by 72 months.
« Last Edit: April 11, 2013, 11:44:50 PM by Isgrimnur » Logged

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« Reply #13 on: April 12, 2013, 12:58:04 AM »

Yeah,  the monthly payment will be a benefit in the end.   I'd start with taking the money that went to the bank as your fed payment.   At least you'll have it paid off quicker.   I'd go for that in a heart beat.   Although they'll will undoubtedly want some money up front though.   

Maybe a loan off a different bank.
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« Reply #14 on: April 12, 2013, 03:10:59 AM »

Quote from: kratz on April 11, 2013, 09:23:45 PM

An unexpected $13K vs. monthly payments is not a small deal, rshetts... it's not like the $40K was due right now.  Suddenly needing to come up with $13K would suck for any of us, I imagine.  Maybe not gellar.

Also, this makes me feel better about the $2K I had to send the feds yesterday.

(And glad your wife is ok.)

All Im saying is he had the choice to do this.  Hes not being forced to take a 40k handout and swallow a 13k tax bill.  I have 2 friends who have lost their homes due to the economic situation. They didnt get help with their debt, they just lost everything.  To put it as softly as possible it irks me to hear someone gripe about getting out of $27000 of debt.  As far as the loss of savings, he had options there as well.  Its like someone hitting the lottery and complaining about the tax bill.  I sympathized with his issues, especially concerning his wife but it doesnt sound like financially he has it all that rough, after all he had the 13k in savings to cover this, how many people can say they have that kind of liquidity?    Sorry, I dont mean to rant but to me this is really looking a gift horse in the mouth.    And KD, I dont really mean to rip into you.  Ive just seen a lot of hardship and toughness in peoples lives and your situation seems pretty darn good compared to what Ive seen. 
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« Reply #15 on: April 12, 2013, 04:06:39 AM »

There's a big difference between trying to figure out how to pay $40k over the next 20 years of the allowed repayment window and trying to figure out how to pay $13k in four days. 
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« Reply #16 on: April 12, 2013, 12:30:24 PM »

Quote from: rshetts2 on April 12, 2013, 03:10:59 AM

Quote from: kratz on April 11, 2013, 09:23:45 PM

An unexpected $13K vs. monthly payments is not a small deal, rshetts... it's not like the $40K was due right now.  Suddenly needing to come up with $13K would suck for any of us, I imagine.  Maybe not gellar.

Also, this makes me feel better about the $2K I had to send the feds yesterday.

(And glad your wife is ok.)

All Im saying is he had the choice to do this.  Hes not being forced to take a 40k handout and swallow a 13k tax bill.  I have 2 friends who have lost their homes due to the economic situation. They didnt get help with their debt, they just lost everything.  To put it as softly as possible it irks me to hear someone gripe about getting out of $27000 of debt.  As far as the loss of savings, he had options there as well.  Its like someone hitting the lottery and complaining about the tax bill.  I sympathized with his issues, especially concerning his wife but it doesnt sound like financially he has it all that rough, after all he had the 13k in savings to cover this, how many people can say they have that kind of liquidity?    Sorry, I dont mean to rant but to me this is really looking a gift horse in the mouth.    And KD, I dont really mean to rip into you.  Ive just seen a lot of hardship and toughness in peoples lives and your situation seems pretty darn good compared to what Ive seen. 

I understand your point, but I don't understand the Internet's constant need to present the  'there is always someone worse off then you so buck up' attitude when someone says they're having a hard time.
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« Reply #17 on: April 12, 2013, 03:39:51 PM »

I'm not griping that they wiped out that debt, I'm upset that nobody in this entire damned process told me "Hey, that's gonna count as misc income - might want to put away a little to cover for that" or anything of that sort.  I had NO IDEA they were going to hit me with 40,000 of additional taxable income so I was caught unaware and unprepared.  I pay my taxes like everyone else, and I understand only a fraction of the 800+ new tax laws each year like everyone else.  I'm not crazy about the use of the phrase "handout" though - my wife was injured so catastrophically that she can no longer pursue her dream.  Her ability to do normal things any other 34 year old person could do are gone.  It's not like we are welfare people cranking out kids to raise the dollar amount on our monthly check.  "Handout" makes it seems like we are trying to work the system or like we are some sort of freeloaders.  The 13k I had saved over the course of a year was on hand for the surgery my wife just had - a full hysterectomy and oophrectomy.  I still have NO idea what the eventual costs of that might be, insurance or otherwise.  Anyone who's spent 3 days in the hospital knows that they like to bill you for every thread in the sheets individually.  In the end, that money will go back to the government for this "handout", leaving me to try to scrounge to pay for the mystery bills that'll come in over the course of whenever the hell the doctors decide to bill me.  (I got a bill 2 years later for her last surgery)

Putting it another way - if I don't find a way to pay this bill in full, you won't have a place to post a reply.
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« Reply #18 on: April 12, 2013, 03:44:35 PM »

May I ask what condition required a hysterectomy? My wife had one at age 26 to cure endometriosis. Just ignore this post if you would rather not say.
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« Reply #19 on: April 12, 2013, 03:54:49 PM »

Quote from: Ironrod on April 12, 2013, 03:44:35 PM

May I ask what condition required a hysterectomy? My wife had one at age 26 to cure endometriosis. Just ignore this post if you would rather not say.

Hit the nail on the head.  She's had endometriosis since she was 17.  It was odd being told by a doctor when she was 18 that we should get pregnant as soon as possible.  She's had 4 surgeries since then to try to alleviate the issues, but the scar tissue and damage was reaching a point where it was just not possible to repair.  When they looked at the organs once removed he speculated that the massive scarring inside would have overtaken the organ and scarred the outside within a year, had we not done the hysterectomy and the oophrectomy (removing the ovaries as well). 
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« Reply #20 on: April 12, 2013, 05:00:29 PM »

My wife had a lot of trouble with that and need surgery at 33 before we had our first kid. She had problems on and off but managed to hold out to her 50's before needing the hysterectomy.

I do hope your wife is doing well.

To relate to your experience I inherited some money (and property) when my father died. Something in my head told me to keep some of the money liquid. Well when the accountant did my taxes it turned out that I owed about $27k on it, because the profits off any annuities he held were taxable to the inheritors. Even though we had the money (and it was from him) it seemed like a hell of a tax hit. Nice part was we had the money, you didn't get any cash, just the bill.

You should contact your local IRS office as they do have payment plans as mentioned up thread. I know, I used to work for them (25+ years ago) and offer them to people. You should maybe file an extension so you can work that out.
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« Reply #21 on: April 12, 2013, 09:06:08 PM »

Quote from: Knightshade Dragon on April 12, 2013, 03:54:49 PM

Quote from: Ironrod on April 12, 2013, 03:44:35 PM

May I ask what condition required a hysterectomy? My wife had one at age 26 to cure endometriosis. Just ignore this post if you would rather not say.

Hit the nail on the head.  She's had endometriosis since she was 17.  It was odd being told by a doctor when she was 18 that we should get pregnant as soon as possible.  She's had 4 surgeries since then to try to alleviate the issues, but the scar tissue and damage was reaching a point where it was just not possible to repair.  When they looked at the organs once removed he speculated that the massive scarring inside would have overtaken the organ and scarred the outside within a year, had we not done the hysterectomy and the oophrectomy (removing the ovaries as well). 

Well, on the bright side it's a surefire cure for endo. Once she heals up from the surgery and gets her hormones balanced she's going to feel better than she has felt in many years.

My wife went through the laparoscopies and all that rigamarole too, and 30 years ago there were no support resources for women -- it was uncharted territory. My wife helped found the national endometriosis association and contributed a chapter to a book that was, for quite a few years, THE book on endo.

So I'm sorry about your financial wallop, but glad to hear that your wife is on the way to recovery.
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« Reply #22 on: April 13, 2013, 02:19:33 PM »

Quote from: Knightshade Dragon on April 12, 2013, 03:39:51 PM

I'm not griping that they wiped out that debt, I'm upset that nobody in this entire damned process told me "Hey, that's gonna count as misc income - might want to put away a little to cover for that" or anything of that sort.  I had NO IDEA they were going to hit me with 40,000 of additional taxable income so I was caught unaware and unprepared.  I pay my taxes like everyone else, and I understand only a fraction of the 800+ new tax laws each year like everyone else.  I'm not crazy about the use of the phrase "handout" though - my wife was injured so catastrophically that she can no longer pursue her dream.  Her ability to do normal things any other 34 year old person could do are gone.  It's not like we are welfare people cranking out kids to raise the dollar amount on our monthly check.  "Handout" makes it seems like we are trying to work the system or like we are some sort of freeloaders.  The 13k I had saved over the course of a year was on hand for the surgery my wife just had - a full hysterectomy and oophrectomy.  I still have NO idea what the eventual costs of that might be, insurance or otherwise.  Anyone who's spent 3 days in the hospital knows that they like to bill you for every thread in the sheets individually.  In the end, that money will go back to the government for this "handout", leaving me to try to scrounge to pay for the mystery bills that'll come in over the course of whenever the hell the doctors decide to bill me.  (I got a bill 2 years later for her last surgery)

Putting it another way - if I don't find a way to pay this bill in full, you won't have a place to post a reply.

My apologies then.  Someone should have informed you of the tax burden you were incurring and getting surprised with it was likely no fun at all.  I didnt at first understand that your frustration was more about the surprise of the tax debt and due to some personal experiences it rubbed me the wrong way.  I also understand the frustration with the health system side of things,  I went through a serious situation that required hospitalization and surgery.  The final total was over $280,000 for my situation.  It put me in a financial hole that took me years to recover from.  I requested and received itemized billings and saw insane charges like $15 a pop for tylenol.  It is indeed quite the racket.  On the other hand I would not be alive today if it wasnt for the excellent surgeon I had so,  while paying back my portion of the medical bill was a huge financial burden, on the plus side I was alive to do so. Incurring medical bills like this is really not optional and they can certainly put you into a financial tailspin.  Im glad you got assistance with your medical debt, I didnt with mine and it made my financial world a mess for a long time.  I refused to take the "out" of bankruptcy and eventually cleared the debt up on my own.  My personal experience colored my perspective and made your comment seem whiny to me.  Hopefully, everything works out for the best for you and your wife and once again you have my apologies.
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« Reply #23 on: April 13, 2013, 04:50:19 PM »

I'm very sorry to hear all of this. We've went through similar stuff as well. It sucks.
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