Well, with my “Bush Tax Cut” and a quarter, I paid the postage on my tax return.
According to the Christian Science Monitor a growing number of people are reacting in a different way: When the Tax Man cometh, they don’t answer the bell.
The Golden Rules of income taxes: always file and never distort your income. Everything else is open to interpretation.
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Established: 21 November 2004
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7 comments
Shoot, I didn’t even bother with postage. I used the IRS’ free-filing service and did my taxes online.
I make a point of having to send them a check every year. It’s always around $100, so I don’t get hit with penalties, but I never pay in advance and never have to wait to get money back.
In good years I have to make a big payment in January, but I don’t loan them money.
In good years I have to make a big payment in January, but I don’t loan them money.
As noted before, I do my damnedest to owe the revenuers a small amount at the end of the year. But 2004 was an unexpectedly bad year, and 2005 was unexpectedly worse, so each of those years I made them a small unintended loan. If I ever have a good year again (sometimes I wonder), making those minimum no-penalty payments will work to my advantage, even if there’s a big chunk to be paid in January or April. But until then, all I can do is curse this wretched economy (from the working person’s perspective) and the corporations that outsource the kind of work I do, and try to make it better this year. No luck so far, but I continue to be optimistic.
They usually wind up owing me money–which I want back as quickly as possible. But in years when I have to pay the feds, yeah, I tend to wait until the deadline is at least on the horizon to do it.
Steve, if it is a large amount you have to pay in January or they nail you with a penalty. I have a client who is consistently late with the 1099s, and often charges payments to different years than I do, so that’s why I usually end up with a payment in April.
Michael, I swear the W-4 is designed to loan the government money. Most payroll accounting departments won’t let you specify the amount to be withheld to stop lending the Feds money.
Bryan, there is a specified percentage of last year’s actual taxes that you can pay as this year’s estimated payments that legally guarantees you will not be hit with a penalty. (It used to be 90 percent; I don’t know these days, because I depend on my accountant for that sort of thing.) As long as one’s income is declining year to year (as mine has been recently… sigh), paying that amount also has the regrettable effect of guaranteeing a refund. I don’t want to overpay, but in my case the amount is small (OK, OK; all the numbers involved are small), and the peace of mind of a no-penalty guarantee has to be considered as well.
The damn penalties will kill you. I paid them once because of a client who paid me in the following year but credited the 1099 to the year I invoiced and I missed the difference until I prepared my taxes and had to increase the income and taxes for the year.