I Owe $140,000 To The IRS

Brought to you by the every dollar app. Start budgeting for free today. I just recently found out that when I go to file my taxes, I am going to owe roughly $140,000 in taxes due to early withdrawal I took out of a 401k last year and then to put down on a house. So my question, I'm trying to figure out where the best place to pull money from either a home equity loan. Um, really don't want to do a payment plan with the IRS, but I just don't know the best path forward. Did you know that this would be. That you would have to pay taxes on that money when you pulled it out. Did you know that this was coming? So I, there's no blame. I did talk to several individuals when I pulled the money from the 401k about how I wanted to pay all the fees and taxes up front, I didn't do my part on the research and I was misinformed that it had been paid, it was all caught up and I didn't realize that much and I didn't realize it hadn't been done until I went to file my tax. Oh gosh, I'm sorry. You know, Marty, honestly, I'd probably go pull a personal loan for it. I think I would rather owe a bank than the IRS at this point, especially for the amount it is, it's going to take you a while to write, pay it off. Cause how much do you make a year? Hey, sorry for the interruption. This is important. No one likes to think about dying, but one day your family will have to deal with everything you leave behind. So the question is, will it be easy or a total nightmare? That's where Knockbox comes in. Knockbox is a kit with 15 categories and clear instructions that give your family an organized plan. So they're not sifting through old paperwork and guessing passwords and dealing with lawyers. So leave your family memories instead of a mess. Grab your Knockbox kit today at knockbox.com slash Ramsey for the best discount available. That's knockbox.com slash Ramsey. How much do you make a year? Roughly $130,000. Oh man. How much did you pull out? I pulled out $400,000 cause I wanted roughly $300,000 for a down payment. Cause I, I want to pay the house off. I've been going through the steps. I don't have any other debt. Did you, did you pay the house off? Is the house free and clear? No, no. I still owe $250,000, $256,000 on the house. Gracious. And do you have any money in any other investments that are not retirement, non-retirement investments? I have a, you know, I have a Roth and a traditional IRA. And then I have about $60,000 in savings, which is my savings fund. I don't know if I should tap into that. I don't want to. No, no, I would. Yeah, I would. I would for sure. Yeah. I, yeah. Rachel's point. I would clear that down to a thousand bucks today and clear that. And you'd have about an $80,000 loan at that point. And I, cause I was going to say, even with your income, I don't know if you'd qualify for a personal loan in a bank. I mean, depending on the situation. So yeah, I try, I try it though. Once you've knocked it down, I would write, yeah, I would rather have an $80,000 loan than a $140,000. So yes, Marty, that savings is what we would say would go. Cause I would put this in baby step two in the debt snowball and you have no other debts. And so, but I would, I would, I would earmark this like that. I mean, that, that that's especially IRS stuff. You want them out ASAP. So, um, yeah, I would pay down as much as I could right now and then take the rest out, um, just from like a credit union or a bank and do a personal loan versus having a payment plan with the IRS. And it's going to be easier for you to manage. Cause the IRS, like they're, they're hard to contact. They don't contact you via email. They, it's only mail. Like the way they do it. And they can do stuff with like garnishing wage. It just makes me nervous. I don't like it. And from a interest, I would not do it. I would not do an HELOC. I would not put your home on that. I would not put the home at risk there. And with HELOCs, the interest rates are sometimes insane. So I think, I mean, my best bet would be, it would probably be a personal loan. I think that would be a best route. Yeah. I said no more debt, but I meant no more leveraging very important things for debt. Like no more borrowing from your 401k and no more like leveraging your house for sure. Oh, I'm sorry. Does that help? It does. And that was where I wasn't sure if taking the equity of the home was better or just trying to get a personal loan. Yeah, for sure. Yeah. I would go the personal loan route. And again, we're not big on the, well, we rarely talk about like borrowing money, but this would be a case you're already in the hole. So rather be in the hole with a bank than the IRS, uh, at that point and, you know, and, and your credit card interest rates and stuff can be up to where to 18, 20, you don't want it on a credit card, you know, like don't put it on the credit card, you know? So again, personal loan is probably going to be your best bet. That's true. Oh, this is, that's terrible. I'm sorry, Margaret. Yep. That's not, not fun at all. I'm sorry about that. Create your free every dollar budget today. The simplest way to budget for your life.