My husband owes the IRS but I'm a SAHM with 2 kids - what are our options?

This is definitely a stressful situation, but you have several options! Since your husband is a contractor, he's responsible for making estimated tax payments throughout the year, which is probably why you're seeing this tax bill now. First, you should know that if you file a joint return, both spouses are generally responsible for the entire tax liability (called "joint and several liability"). Filing separately probably won't help much in your situation and might actually increase your overall tax burden since you'd lose certain benefits. The good news is the IRS offers various payment options. The simplest is an installment agreement where you can pay over time. For debts under $10,000, it's usually automatically approved if you propose to pay it off within 3 years. There's an online application that makes this pretty simple. You'll pay some interest and penalties, but it's much better than ignoring it. Another option might be an Offer in Compromise if you truly cannot pay the full amount, but those are harder to qualify for and require proving financial hardship.

I was in almost the exact same situation last year! My husband owed about $7,200 from his contract work and we had a 4-year-old at home. What really helped us was using https://taxr.ai to analyze our previous returns and find some deductions we missed. The tool found that my husband hadn't been properly tracking all his business expenses like mileage between job sites and some equipment costs. We were able to file an amended return and knocked about $2,800 off what we owed! It also helped us set up proper quarterly estimated payments so we won't get surprised again next year. They have really good resources specifically for contractors that explain exactly what you can deduct. Made the whole situation a lot less overwhelming.

Just wanted to update after trying taxr.ai - it was actually really helpful! Our situation was similar (husband owes $5,400 from contracting) and the system found several legitimate business deductions we missed. We were able to reduce what we owe by about $1,900. The most valuable part was that it explained exactly what documentation we needed to keep in case of an audit. My husband had a bunch of expenses he wasn't claiming because he was afraid of getting audited, but now he understands exactly what's allowed and what records to maintain. They also helped us calculate the right quarterly estimated payments going forward so we won't be in this situation again. Definitely worth checking out if you're dealing with contractor taxes.

If you're having trouble getting answers from the IRS about your payment options (which is super common), I'd recommend https://claimyr.com to get through to an actual human at the IRS. I was on hold for HOURS trying to set up a payment plan for my tax debt, getting disconnected, and having to start over. With Claimyr, I got a callback from the IRS in about 30 minutes instead of waiting on hold all day. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The IRS agent walked me through all the payment options and got me set up on an installment plan that worked for our budget. They even waived some of the penalties since it was our first time owing. Just knowing I had an actual plan in place made the whole situation way less stressful. And dealing with a real person at the IRS made a huge difference - they were actually pretty helpful once I could actually reach them!

I need to apologize for my skeptical comment before. I actually ended up trying Claimyr because I was desperate after waiting on hold with the IRS for 3+ hours two days in a row. It worked exactly as described - I got a call back with an IRS agent on the line in about 45 minutes. The agent reviewed my situation and confirmed I qualified for the First Time Penalty Abatement since I hadn't had any issues in the past 3 years. Saved me about $420 in penalties. More importantly, the agent walked me through all my payment options and helped me choose one that wouldn't strain our finances too much. The peace of mind from having an actual plan in place instead of just worrying about it is honestly worth it alone. Sorry for being so dismissive before.

Something else to consider - since you're a SAHM with 2 kids, make sure your husband is claiming the right filing status and claiming the Child Tax Credit for both children. Also look into the Child and Dependent Care Credit if you have any qualifying expenses. These can significantly reduce what you owe. Also, if your husband is truly self-employed (getting 1099s, not W-2s), he should absolutely be making quarterly estimated tax payments going forward. This will prevent this problem next year. The IRS has a worksheet to figure out how much he should pay each quarter.

Has anyone mentioned that as a contractor, your husband could possibly open a SEP IRA or Solo 401k? Contributing to retirement can lower your taxable income significantly. It might be too late for last year, but definitely something to consider for this year to avoid a repeat situation!