This was an interesting and vulnerable episode for me to record, and I hope you can learn from my mistakes. I’ve been nervous to let you all in on this knowledge, but I just paid off a $520,000 federal tax lien. Yep. You read that right. I just paid it off and I want to share my experience with you and tell you just how got myself into this situation, and more importantly, how I got myself out of it.
Many of you know I quit my job in 2009 to focus on real estate. Taxes are very different when you are your own boss. From 2009 to 2012 or 2013, we had adoption tax credits and tax write-offs we could apply. Starting in 2012 or 2013, things shifted a bit for us. I started making more money and our adoption tax credit and write-offs ran out.
At this time, I was hit with a $60,000- or $70,000-dollar bill. To say I was shocked would be an understatement. The next year I owed $120,000 in taxes. Whew. The more money I made, the bigger the tax hole grew. At this point a good friend of mine pointed out that I was starting to make some pretty good money and I needed to start thinking seriously about taxes. I really thought I could handle it and that I had it under control. In the meantime, I just kept getting further and further in tax debt the more money I made. I started getting more and more letters from the IRS and even from tax attorneys.
Finally, after having an eye-opening talk with the local IRS officer about just how serious my situation was, I decided to hire an operations manager to manage my money and keep track of all the books. The truth? I’m not great at numbers or managing my cashflow. I needed help and I’m so glad I hired her. I got on a payment plan with the IRS and started paying things down.
Check out Part 2 for the rest of my story!
Listen and learn:
- It’s not about what you make, it’s what you keep.
- What happened in 2012 and 2013 that changed my situation.
- Why it’s important to recognize your weaknesses and hire someone to help you with them.
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