Last night, the wife & I got the taxes done. We always get them done early because we always pay in. We adjust our W-4s so not as much gets taken out and we have to pay in a little bit every year (I hate giving out an interest free loan to the government). Usually, we only have to pay in a few hundred, and when we lived in WI, we had it working so well that our state refund would almost exactly cover our federal tax bill. This last year, however, we both got promotions at work, and the raises that go with them. We didn’t realize it, but we found ourselves in a tax bracket we’ve never been in before, and the bill this year is a little more painful than normal. Not out of reach, mind you, just not expected.
However, the H&R Block tax guy was a bit shocked, and actually looked afraid we’d blow a gasket that we had to pay in. Like I said, we were a bit surprised, but not overly so. Until he told us that if we owe more than $1000 in taxes, the IRS might charge us interest?
Think about that for a second. I overpay, I get my money back without interest. But if I underpay, even if I pay the bill in full on or before the due date, I get dinged for interest. Well, no one ever said Uncle Sam was fair.
I’ll one-up you on that. Last year in WI, many tax refunds didn’t go out in time b/c DoR processed all the returns owing money before they processed ones claiming a refund (to fill the coffers, I guess). Anyways, since I didn’t get my return until later in the year, state law had the DoR pay me interest on the refund.
That’s right, I (along with the other productive members of society) paid myself interest on a fucking tax refund because Revenue is a bunch of incompetents and couldn’t get it out in time.
“We always get them done early because we always pay in.”
Early? I’ve already got the small $$$ loan back from teh .gov in my hands.
Slowpoke (snicker)
They didn’t get much more than they requested by law, and they didn’t get to keep it any longer than I could physically to let them, which was barely over a month this year because of the 01/31 deadline for tax records.
I’ll probably get to our taxes this weekend. We have so many unforeseen/unplanables from 2009 I have no idea where we’ll end up. We usually try to pay in the remainder owed also, but last year my income and expenses were much smaller than usual, I did no stock trading on the side, and the medical expenses from my Sweetie’s breast cancer experience make the whole thing unguessable.
No, I’m not worried. Whatever the “Tim Geithner Edition” of TurboTax says, that’s what we’ll do…
Your H&R Block guy is a little confused, I think. He’s calling the underpayment penalty “interest”, and didn’t mention there are several exceptions to the $1000 limit.
Read more here: http://www.irs.gov/pub/irs-pdf/f1040es.pdf
and pp 48-50 here: http://www.irs.gov/pub/irs-pdf/p505.pdf
Phil:
😛
Ham:
He did mention the exceptions, and was just warning us that we “might” get dinged. He did call it interest, not a penalty. We already adjusted our W-2s to up the with holdings a bit and reduce the tax bill.