I Can’t Take Any More of This Paperwork

I’ve been working on our amended tax returns and I have to say…I can’t barely even look at them anymore! Even though it could mean that I’d have to pay more in taxes, I think I’d be all for making income taxes simpler. Put amount from line 4 in line 11. Then add 10 and 11. Multiply the greater of line 4 or line 10 by 0.15 and put in line 12. Ugh.

In any case, I know now how much we owe except for any penalties and interest for our federal return. The damage right now is less than $3,000 for both the federal and the state. To pay our state I will pull from our savings account. The federal I am still figuring out what to do about going into a payment plan. I have the form to do it, I need to read it again when my mind isn’t so jumbled.

For tonight, though…I call it a night. It has been a very rough weekend after a very rough week.

Posted by Tricia on April 22, 2007 at 10:43 PM in Life Experiences, Spending Money | 8 Comments »
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sam responded:
Posted: April 23rd, 2007 at 3:14 am
hang in there – hope it gets better for you.
danielle responded:
Posted: April 23rd, 2007 at 10:00 am
Did you claim the child tax credit?

I am just wondering because my husband and I make about the same as you do, and even without the tax credit this year (baby’s due in June), we still got a refund of $1347. My husband changed his witholding, and made it so that not so much is taken out, and we just figure that with the tax credit next year, we still won’t have to pay.

Usually, people with mediocre incomes and children don’t pay…
Did you owe the IRS from before?
Tricia responded:
Posted: April 23rd, 2007 at 10:15 am
Sam – thank you

Danielle – We claimed the child tax credit. The problem is that in 2005 we received a wonderful refund. It turns out it was due to a mistake and now we owe them back the money they gave us as a refund (plus interest and any penalties they assess). I won’t know the exact IRS interest and penalty until they receive my amended return and calculate it.
Pro Se responded:
Posted: April 23rd, 2007 at 11:28 am
The IRS paid you in error, and now they are penalizing you for their error in interest and penalties? Did I read that right? Why don’t they just ask you for the original amount back?
Donna responded:
Posted: April 23rd, 2007 at 11:30 am
I was thinking the same thing this year while trying to calculate child care credit, especially when it came to if it is greater than line x put the amount from line y but if it less than line x then put in the amount from table z (the prior was a dramatization). ARRGGHH! Do they make this up to keep accountants busy? We owed more this year because we no longer own a house and our itemized deductions were less than the standard deductions
Tricia responded:
Posted: April 23rd, 2007 at 11:37 am
Pro Se – the error is all my fault. I took deductions to reduce income that I couldn’t take. Instead of waiting for an audit, now that I discovered I did something wrong I want to make it right.
Fellowes responded:
Posted: April 23rd, 2007 at 1:47 pm
Tricia, good to be proactive than risk an audit. I went through an audit 4 years ago, and while the IRS ultimately didn’t change anything on any returns, it was a painful and laborious process. Best to fix any errors that you know about ahead of time because years down the line you may find yourself without the necessary paperwork, which would clearly be bad news.
Chris responded:
Posted: April 23rd, 2007 at 5:35 pm
Read the Fairtax and visit fairtax.org. Others agree with you, our federal income tax system is unnecessarily complicated.

I recall reading that the IRS spends 10 billion dollars a year just collecting taxes under our complex system.