Dear Debt Adviser,
I’m a 19-year-old who filed taxes for the first time, and now I owe the IRS over $2,000 in debt. I don’t know why, other than the fact that I reported children that weren’t mine. My aunt told me to report them because I’ve been helping her financially. She is an illegal alien and she shouldn’t be in this country at all because she got in trouble with the government years ago. So, my question is: Can I do anything about this? My aunt was the one who filed my taxes, and I didn’t know any better. If there’s no way I can fix it, then how low can my payments be? I’m currently a student with no financial aid help.
— Sarah

Dear Sarah,
You have learned a valuable lesson at a young age. Getting financial advice from a nonprofessional is not a wise thing to do. It’s great to listen to the experience of others, as a guide. But before pulling the trigger on a tax filing or investment, you need to get competent advice. Too often well meaning friends and relatives leave out important facts in their suggestions. I have a good friend who often tells me how much he makes on stock bets. He always neglects to mention the fortune he lost on other stock bets he made.

Given the fact that you submitted a fraudulent tax return, the IRS might have cause to pursue criminal charges for a “false, fictitious or fraudulent claim.” So, you are getting by fairly easy with only having to pay $2,000, which may include some penalties as well as taxes owed.

As to fixing your situation, here is my thought: You can’t fix the past, but if you change your circumstances, you can do a lot to fix the future. You are obviously a bright young lady, since you are a college student. It is time for you to take your place as a leader in your family. I want you to research suggestions from family members before you make decisions and then let your well-meaning relatives know what you found after examining the facts. You will have better information and help them in the process. You will also become a trusted adviser yourself and help your entire family realize a better life in America. I have to add that I’d feel better if you helped your aunt become a legal immigrant along the way.

Now for the IRS issue. You may be eligible for an installment agreement with them to pay what you owe monthly. Visit the IRS website and review the online payment agreement. If you owe $25,000 or less in combined tax, penalties and interest, you can use an online payment agreement or you call the number on your tax bill and request that Installment Agreement, Form 9465, be mailed to you. You also have the option to print out an installment plan request form and mail it to the address on the bill that you received from the IRS.

The IRS is not a creditor that you want to mess with. You will have to find a way to make the monthly installment payment, should you qualify for one, or you may find your wages or bank account garnished.

Moving forward, be sure to file a complete and accurate tax return each year. If you don’t understand how to file your return, seek the help of a professional tax preparer. I recommend you find a nonprofit organization that helps persons prepare tax returns for free or low cost. The IRS Volunteer Income Tax Assistance Program, reachable by calling (800) 906-9887, is available if you earn less than $49,000 per year, or you can check with your local United Way office for information on organizations that provided these services.

Remember, you’re not a kid anymore. Don’t define yourself as a student with no financial aid. Step up and take responsibility for the debt and then become a real asset to your family.

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