Well, I did it early with a few hours to spare - I gave the IRS my vacation money

[Maleficent13]

Can I ask a question about extensions?

I have heard and read that if you file an extension, you still have to send in your estimated payment on time, if any owed. If you need an extension to figure out your taxes, then how do you know how much you're going to owe? And if you know how much you're going to owe, why do you need an extension?

It has always confused me.

 

[jgmklmhem]

Very painful to send the vacation money away...especially when we will hear in a few months that the Department of (fill in the Blank) just up and lost 30 million dollars or something like that (happens every year that some where some how millions of OUR dollars are lost...not spent on something we disapprove of....just lost). This year we personally did ok...got about 1000 back from the Feds and paid 300 to the state (new job etc made it interesting).

 

[ducklite]

Can I ask a question about extensions?

I have heard and read that if you file an extension, you still have to send in your estimated payment on time, if any owed. If you need an extension to figure out your taxes, then how do you know how much you're going to owe? And if you know how much you're going to owe, why do you need an extension?

It has always confused me.

Didn't you know that "IRS" is a synonym for "confusion"?

The whole idea behind filing an extension is when you are still trying to finish the return because paperwork needs to be located or what have you. But most people have an idea of things and can use "close enough" amounts to get a general idea. An example that will make it clearer:

You sold a house that you bought when you were single in 1972, and either aren't married or never put your spouse on teh title (smart person LOL!). You sold it for $375,000, and you can't recall exactly what you paid for it, but know it was *Someplace* around $20,000. So you know that you need to get a copy of the original deed to get the price paid before you file, but for now you can "guestimate" and then know that you owe say $3000 in capital gains taxes (I made that number up solely for the sake of this example.) You have all the rest of the info you need, and when all is said and done using your guestimate you'll owe a total of $1100 total in taxes.

So you file an extension with that $1100 check. Now, one of two things can happen when you do complete and file the return. You can find out that you actually owe less and then apply for a refund based on what you've paid, or you can owe lets say another $30. Because you've already paid the majority of the debt, you'll only pay interest and penalties on the $30, which would be a small amount, as opposed to $1130 if you hdan't made that payment.

I hope that makes sense.

Anne

 

[Maleficent13]

Got it, thanks! It's much more clear now.

 

[KristaTX]

The government IS taking your money.

Even if we didn't pay at the end of the year, and paid it all sooner (and lost the interest), they'd STILL be taking our money.

That is true. I know the government wastes a percentage (possibly a huge one) of what we pay, but still, taxes are a fact of life. I guess what I should have said was that some people seem to think paying any taxes is a case of the government is stealing from them. The wasted money, yes, that is stealing. But in general we reap great benefits from paying taxes.

I know there are unusual circumstances where people are surprised at owing a large chunk all at once. But when someone has to pay a big chunk of money that they were planning to use on something like a vacation, then that might just poor planning. Especially if the same thing happened to them last year, the year before that, etc. (I'm not saying that is the OP's case - maybe this is a "surprise-you-owe" year for them.) We all know that we have to pay our taxes at some point during the year, so why do people get so irritated if they wait until the last minute to pay it? The rest of us have paid it gradually during the year or else purposely saved for it, and it's much less painful that way.

For those of you who save it all up knowing full well that it will go to pay your taxes, and you earn and keep the interest, that is wonderful. But not paying enough all year and then thinking you won't owe come April 15th makes no sense. And most of the people who complain about owing seem to have that attitude - that they government is stealing from them.

 

[MouseWorshipin]

That is true. I know the government wastes a percentage (possibly a huge one) of what we pay, but still, taxes are a fact of life. I guess what I should have said was that some people seem to think paying any taxes is a case of the government is stealing from them. The wasted money, yes, that is stealing. But in general we reap great benefits from paying taxes.

I know there are unusual circumstances where people are surprised at owing a large chunk all at once. But when someone has to pay a big chunk of money that they were planning to use on something like a vacation, then that might just poor planning. Especially if the same thing happened to them last year, the year before that, etc. (I'm not saying that is the OP's case - maybe this is a "surprise-you-owe" year for them.) We all know that we have to pay our taxes at some point during the year, so why do people get so irritated if they wait until the last minute to pay it? The rest of us have paid it gradually during the year or else purposely saved for it, and it's much less painful that way.

For those of you who save it all up knowing full well that it will go to pay your taxes, and you earn and keep the interest, that is wonderful. But not paying enough all year and then thinking you won't owe come April 15th makes no sense. And most of the people who complain about owing seem to have that attitude - that they government is stealing from them.

They ARE stealing the money. Only way around that would be to make it voluntary.

It is our money, we work for it - some work very hard for it - and the government boys take it against our will and spend $14 million to study cow farts.

There might be people who think they use the money wisely, and WE couldn't possibly be smart enough to do things ourselves, so they're happy to give it to them, but not most. That's why it isn't voluntary.

 

[Pooh's Pixie]

For those that have to pay, why don't you adjust your w-4's and have more taken out over the year instead of waiting to the last minute to send out one big check?

Same question for those that get big refunds? (only adjust to take out less).

If only it were that simple. My DH has his own business and we have to pay quarterly because there is no such thing as a W4. You pay an estimate. So, based on what you think you're going to make, and what you think your deductions are gonna be, you pay every quarter. However, things change throughout the year: It's hard to know how much you are going to make, esp. if some income fluctuates seasonally. Also, by the time you realize you didn't pay enough estimate, it's April and you not only have to make up for last year, but readjust this year, only now we're 4 months into the year!!!

AAAARRRGGGHHH! Can you tell I'm a little frustrated? My Dh keeps saying things like, we could've bought a small house in the mid-west with what we're paying...or a maserati, blah blah.