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Need Advice - I screwed up, and i don't have money for taxes..

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flntnr

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Oct 15, 2020
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#1
Hey guys,

I never thought I will be writing a post similar to this. I'm thankful for any kind of help or advice because I don't know what to do, and
I'm under the pressure - can't think clear anymore.

To give you a context:

- I'm Software Developer, usually contracting for companies or freelancing
- I lost a job in February, and because I had savings, I decided to start a company and take a rest to refresh
- The corona craziness started. I was too optimistic, and even with a huge bounce rate, low conversion rates, and very small additional income
I came into a situation that I spent the savings ( investing, paying freelancers to help me with trash MVP, life costs). Now I see it, wrong execution,
too optimistic approach. To be honest, I was in the front line when it came to jokes about the pandemic or market issues...

But there is one more issue, the income tax...
( We're talking about 15K € on taxes. From the readings here, I guess a lot of you are right now thinking something like a "noob, rookie, why, idiot, where is your brain" <--- I already passed that phase, but still can't properly sleep.. )

I was totally cool about this because I finally had the deal for a project in a final phase. But there was no legal agreement, I stopped looking
for new customers, and the last week of August the deal was off the table -- they decided to outsource it abroad, because of the cheaper production costs.


Obviously, I immediately started to look for a job. After having a couple of the offers which would pay me less than a 1/4 of the amount I need to make for taxes,
with contract conditions that can't really protect the viability of my income... Still trying to figure it out, but honestly, I don't know what I can do,

I researched the option to post-pone payment or pay it in cuts, but as the law requires the "lien" and besides my electronics, I use for the work
I do not own anything that could be used for this case. ( Family / Friends -- not an option )

Right now, here am i. Desperate, looking for some smart words, from smart people.

Thanks for any kind of help!

( Yes, this is for real. I'm a real guy, who did mistakes, and now needs to find a way out and take a huge lesson )
 
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#2
Firstly, you will call the tax authorities and agree to an installment plan. This installment plan you gonna honor and you won´t miss a singe payment. If you miss a payment they will cancel that agreement, so its important that you respect the installment plan. Therefore also make a realistic installment plan.

Secondly you will take a deep breath, and de-stress. Do not stress about this situation. This is a "normal" situation, and happens often that freelancers work up tax debt.
 
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#3
@NicolasMaduro hit the nail on the head. If we're only talking about 15,000 EUR in back taxes, it's really not that bad. It's a common mistake freelancers make. As long as you show a willingness to pay it all on an aggressive repayment plan, you'll most likely be fine. Speak with your tax authority and explain your situation. Let them know you cannot sell any of your possessions since everything of value that you own, is needed to make a living.

You'll be living on bare minimum for a while until it's all paid off. But unless there are aggravating circumstances (which it doesn't sound like), I don't think it will get much worse than that.

Once the plan is laid out, pay on time every time and keep your eyes on the target. You will get through this.
 
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#4
In the past I have been in the same situation as you OP. As mentioned here already, I did the same and called the tax office to get an installment plan. I paid what I owe them and nothing happend after that.
 
#7
@NicolasMaduro @Sols @<<snippet>> @bibing Thanks, guys. I contacted a tax office, and i have to provide them with an official request. But the answer was unclear - they told me they will decide if they approve my request based on the situation.


Firstly, you will call the tax authorities and agree to an installment plan. This installment plan you gonna honor and you won´t miss a singe payment. If you miss a payment they will cancel that agreement, so its important that you respect the installment plan. Therefore also make a realistic installment plan.

Secondly you will take a deep breath, and de-stress. Do not stress about this situation. This is a "normal" situation, and happens often that freelancers work up tax debt.
Click to expand...
@NicolasMaduro hit the nail on the head. If we're only talking about 15,000 EUR in back taxes, it's really not that bad. It's a common mistake freelancers make. As long as you show a willingness to pay it all on an aggressive repayment plan, you'll most likely be fine. Speak with your tax authority and explain your situation. Let them know you cannot sell any of your possessions since everything of value that you own, is needed to make a living.

You'll be living on bare minimum for a while until it's all paid off. But unless there are aggravating circumstances (which it doesn't sound like), I don't think it will get much worse than that.

Once the plan is laid out, pay on time every time and keep your eyes on the target. You will get through this.
Click to expand...
Thanks for your support!

In the past I have been in the same situation as you OP. As mentioned here already, I did the same and called the tax office to get an installment plan. I paid what I owe them and nothing happend after that.
Click to expand...
I'm happy that I am not the only one who did this kind of mistake :D

15k? Those are rookie numbers my friend .
Click to expand...
Yeah, I get it. But I would say it depends on the ratio to your income. If you create a debt which is in value of 5% of your yearly income and debt which is 20% - in my opinion, it doesn't matter if it's a rookie number or not :)

Exact situation for me with about 12k in debt.
Click to expand...
I would say everyone takes a lesson on a situation like this.. right?
 
#8
flntnr said:
I contacted a tax office, and i have to provide them with an official request. But the answer was unclear - they told me they will decide if they approve my request based on the situation.
Click to expand...
That's normal. They need to review the case before they can comment on what they will decide. They base this decision on your wealth, assets, and current income. But if the situation is as described, you should end up with a payment plan and that'll be the end of it.

flntnr said:
I would say everyone takes a lesson on a situation like this.. right?
Click to expand...
It's one of the reasons I always encourage people to seek professional tax advice and do things by the book. Some lessons really stink to learn. ;)
 
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#9
Did this in my 1st year if business. Soent mybtax money then had to work like a lunatic to make tax money and life money to make the payment. Didnt have to ask for a payment plan as work was coming in at the time but I learnt a big lesson . Put say 20% of any invoice in an account called tax .. keep doing that all year .. you wont need all of it if you have a good accountant and you wont stress as there will always be more than you need .
 
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#10
OCT Folks to the rescue, one of the many reasons i appreciate this Community...

All Aboard, 1for all,All for 1. thu&¤#
 
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#11
Good words of encouragement thu&¤#. Key is don't stress as there are far more worse things happening right now in the world than simply owing money.
 
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#13
That can be quite difficult to handle, but as a few already told, you are far from being lost.

Considering you don't have valuable goods to be charged by them, they have no other option than accept the instalment. Be honest and straight with them, and provide a workable plan to return this cash. I don't know from which country you are, but all the EU countries have this sort of possibility on taxes. It is way more costly for anyone if they go hunt your goods, as they might not return the money, the goods might not be valuable as they thought they were, and they will have another person depending on social security access level.

But it is very important you keep in mind that you need to accomplish it.

From the motivation point of view, thank god you owe money to someone legit. Imagine how you would feel if you owe 50k to a smuggler or a "Laundromat Tycoon".
 
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