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Two can play this game. Adjust your withholding rate so you owe at the end of the year and submit the return on April 15th.
I like the way you think! :cool:
Here's another "play" for that sleazy government game: do exactly what you suggested, but also file an extension and submit the return on August 15th !!!
Extensions extend the time when the form is due, but do not extend the time when the money is due.
Right you are, Mr. Bovine. But one can always underpay and wait for the Infernal Revenuers to send a bill. The penalties at the Federal level are not that large, at least compared to my state tax commission, and it sure keeps the sleazebags from holding on to your money.:cool:
The penalties at the Federal level are not that large
Right you are, Mr. Raz.
The IRS calls them "penalties" and makes it sound rather scary (easy for them to do.) But it's just a bit of interest, at a modest rate, and so long as one plays along with that, one still won't earn the wrath of the IRS agents raiding your home at 4 AM and terrorizing your wife and children.
Actually I have a bit of experience with this.
There is a difference between penalties and interest.
If you are underwitheld under some threshold, lets say 5% underwitheld,
then you just pay the underpaid amount and interest. If however you are over the threshold. Then there is a penatly and interest.
Yes the interest is not to hard to swallow. You don't want to pay the penalty though. I think the magic number is 10%. If you are underwithheld by less than 10% no penalty.
For example if your tax liablity for 2009 is 10K. As long as you have 9K paid in by April 15th you are OK. (Not exactly true, but lets roll with it) Only interest will be owed on the 1K.
If you have less than 9k paid in you are going to get a penalty. I don't know how the penalty is calculated.
I was told by the IRS that I underpaid my 2008 taxes by 6K The penalty and interest was about 1K. (See on another post that I really did not underpay, another story) The penatly was most of the 1K.
Don't take this as tax advice, I am not a CPA. I am a son of a CPA (My departed mother). So I prepare my complex taxes each year to make her proud. P.S. I also have had bad experiences just throwing a bunch of paper work at a tax firm and have them doing the work. My advice is that you should kind of know what is going on with your situation. They make mistakes too, and they will not always stand behind their work.
I think another way to do this is to state that you want your tax return to be used to pay next year's taxes. (Which is this year). Then if you are employed fill out another W9, and bump your state withholding alllowance.
Yes you still don't have your return money, but doing nothing results in you
not having your return money and getting a bigger ding out of your check each week.
This also works if you are self employed. You can use the credit to reduce your quarerlty taxes owed. I'm not sure about other states, but
in Illinois I think you could credit your return to this year's taxes, then
skip as many quarterly payments as the return is worth.
Since 1st quarter state tax is due april 15th, then you don't send that check in. Ha Ha!
Watch the states scramble to say you can only claim as many allowances as you legally can at tax reporting time!
Once again see my CPA disclaimer in another portion of this thread.
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