The Taxman Cometh -- Today!
This was supposed to be an entry about the best ways to spend your tax refund. I was intending to fantasize about how I wanted to spend the money (dinner at CityZen) and then offer sharp and compelling analysis of how I should spend the money to make it work for me (pay off debt, bolster savings, invest in conservative stocks).
But financial realities have once again intruded into my best-laid plans: I owe the federal government $2,401. My refund from the District is a paltry $652. That means I am on the hook for a net of $1,749.
After I got the news from my accountant yesterday, I started frantically seeking advice from the flurry of tax-related mail that has flooded my inbox in recent weeks. Will any of it really help me?
Don't panic. That's the first helpful tip in an e-mail from the California Society of CPAs. But it's too late. I am already starting to have a freak out at my desk.
Don't panic. The IRS suggests the same thing. Do people not realize this is easier said than done? Beyond that, the agency recommends paying as much as possible by today's deadline. That will help reduce any penalties and interest charged on the balance.
Pay in installments This option sounds attractive -- particularly if you don't have the cash upfront. But the fees are actually pretty high. The IRS charges you $105 for setting it up, though they will knock it down to $52 if the payments are deducted directly from your checking account. The good news is that if you can pay off your balance within 120 days, the fees are waived.
Don't turn to your credit card. Money Under 30 warns against using your credit card as a crutch to get through this. There are third-party fees ranging between 2.5 percent to 4 percent of the charge for the transaction in addition to whatever interest rate your credit card charges.
Get free stuff. Take the edge off the payments by indulging in free treats and discounts today. Frugalista reports that Cinnabon and Maggie Moo's are giving snacks away while Papa John's and P.F. Chang's are offering discounts today. Let us know if you hear of any others!
To pay our tax bill, my husband and I will have to dip into our savings account (again). Though I feel fortunate that we can afford to pay it in full, we will have to redo the budget for projects we had planned for our new house on Capitol Hill. But I guess that's what I get for dreaming.
Posted by: sldc | April 15, 2009 10:50 AM | Report abuse
Posted by: gettingdizzy1 | April 15, 2009 6:39 PM | Report abuse
Posted by: ylanmui | April 16, 2009 8:00 AM | Report abuse
The comments to this entry are closed.