[OT] I'm In Shock!

"CatNipped" wrote in message ...
We just got back from H&R Block. We owe *FOUR THOUSAND SIX HUNDRED DOLLARS*
to the IRS! thud

That sucks!

Last year was the first year I had to pay money--sure, the one year
I'm unemployed is the year I owe. Wouldn't you know it.

I should've broken even, but they figured my taxes at Nova Scotia
rates even though I'd only been in Nova Scotia for 4 of the 12 months.
Had they allowed me Ontario rates for the 8 months I'd been in
Ontario, I'd have gotten money back.

Taxes BLOW.

--Fil

"CatNipped" wrote in message
...


I'm a *lot* confused as to the difference between *filing* and actually
*paying* taxes. Some people here have said be sure to file before the
15th, but implied that you don't have to send a check at the same time????
I didn't know you could do that, if that is indeed what they mean.

Hugs,

CatNipped


Now I do not know your situation and cannot give you advice. But what I
tell my clients is that on April 15th they must either mail the (signed)
return or pay the taxes due with a request for extension. Or mail the
return with as much as you can pay. The IRS will send you a bill for the
balance due. An extension only really works if you can pay the tax by April
15th. It is an extension of time to file, not time to pay.

You will be hit with penalties for paying late and interest on what you pay
late.

From the IRS
Penalties and interest apply to years in which money is owed. The interest
charged on late payments changes quarterly. During the last several years
the interest rate has ranged from a high of 9 percent to a low of 4 percent.
The penalty for filing late is generally 5 percent per month, or part of a
month, up to 25 percent of the amount of the tax shown due on the return.
The penalty for paying late is 1/2 of 1 percent per month, up to 25 percent
of the unpaid amount due.



see http://tinyurl.com/6p6n3



The late payment penalty is cut in half if you file an installment
agreement.



See http://tinyurl.com/4u3m4 for interest rates



Now a plug for you friendly neighborhood CPA EA (Enrolled Agent) or Tax
Preparer. If I had a client who was considering taking money out of an IRA
to pay off credit card debt (which isn't necessarily a bad idea)

I would calculate the amount it would cost them in taxes and penalties ahead
of time so they wouldn't get too attached to that part of the money.

I'd probably have them pay the state taxes due before the end of the year so
they could get that deduction against the income.

I'd recommend that they do it over two tax years if that would keep them
from going into a higher tax bracket with a large boost in income.

It would cost them about $200 for me to figure this ahead of time.

Jo

jmcquown wrote:
I don't have any problem with it. Look at how many people can't
afford an IRA at all...it's pretty much a luxury.

It's not a luxury. I've paid into the Social Security system for 25
years
but it's doubtful I'll get enough back to be able to live on the
"pension"
they give me in 20 years.

That's a separate issue altogether.

The IRA I have was a 401K provided by my employer
but the money that went into it came out of my blood sweat and tears.

Yes, as did mine, but my point is this - how many people live
day-to-day, paycheck-to-paycheck and don't have enough money to even
set any aside for an IRA? Quite a few, especially in our economy as it
is today. I feel blessed that I'm educated/lucky enough to have had a
good job/career where I made enough money to have IRAs. Many people
are just struggling to make ends meet.



I had it "rolled over" into an IRA when I lost my job a year ago.
Again, I
paid into that fund with my own hard-earned money; it came out of my
paycheck. It's *my* money. I have no problem paying taxes on it.
But you
should be able to use it when needed without being hit with a
double-whammy
called a "penalty" for early withdrawal *after* electing to pay the
taxes on
it up front when you need to use some of it.

Jill

But then it becomes a savings account and not an IRA. That's why the
penalty is there - so that the money is somewhat insured for the
investemt group that holds the IRA. It's a payoff - you generally get
better returns and tax bennies on an IRA in exchange for "promising"
not to withdraw the money early - and the penalty is part of that
promise.

I agree there should be a one-time "hardship withdrawl" clause or
something - there probably is - I don't know. And I understand that the
unforseen happens, sometimes. But it *is* an IRA and not a savings or
investment account. And with that comes the constraints.

And FWIW, I feel for ya. I was "downsized" in '89 and it sucks. Keep
the faith.

-L.

-L. wrote:
jmcquown wrote:
I don't have any problem with it. Look at how many people can't
afford an IRA at all...it's pretty much a luxury.

It's not a luxury. I've paid into the Social Security system for 25
years but it's doubtful I'll get enough back to be able to live on
the "pension" they give me in 20 years.

That's a separate issue altogether.

The IRA I have was a 401K provided by my employer
but the money that went into it came out of my blood sweat and tears.

Yes, as did mine, but my point is this - how many people live
day-to-day, paycheck-to-paycheck and don't have enough money to even
set any aside for an IRA?

Did that for a number of the last 20 years, thank you. At jobs that didn't
offer retirement funds or 401K's and only enough to meet the bills, barely.

Quite a few, especially in our economy as
it is today. I feel blessed that I'm educated/lucky enough to have
had a good job/career where I made enough money to have IRAs. Many
people are just struggling to make ends meet.



I had it "rolled over" into an IRA when I lost my job a year ago.
Again, I paid into that fund with my own hard-earned money; it came
out of my paycheck. It's *my* money. I have no problem paying
taxes on it. But you should be able to use it when needed without
being hit with a double-whammy called a "penalty" for early
withdrawal *after* electing to pay the taxes on it up front when you
need to use some of it.

Jill

But then it becomes a savings account and not an IRA.

That's silly. If I'd rolled the entire thing into my savings account it
wouldn't be held in mutual funds and wouldn't be tax-free until I decide to
withdraw from it. I have a savings account; they are two totally different
things.

penalty is there - so that the money is somewhat insured for the
investemt group that holds the IRA. It's a payoff - you generally get
better returns and tax bennies on an IRA in exchange for "promising"
not to withdraw the money early - and the penalty is part of that
promise.

The Penalty is for the IRS, not the IRA. The mutual fund stockholders could
care less what you do with your shares in said fund. Consult your tax
advisor.

I agree there should be a one-time "hardship withdrawl" clause or
something - there probably is - I don't know. And I understand that
the unforseen happens, sometimes. But it *is* an IRA and not a
savings or investment account. And with that comes the constraints.

It's still my money; I should be able to do with it what I want AFTER paying
the taxes (which I do). Try being unemployed for a year and using up your
savings... what happens? Oh, I have an IRA. Now guess what? I won't have
enough to retire on but what the hell. I've kept a roof over my head,
myself and pets fed. Maybe when I turn 65 I'll just shoot myself.

Jill

In article , "CatNipped" wrote:
We just got back from H&R Block. We owe *FOUR THOUSAND SIX HUNDRED DOLLARS*
to the IRS! thud

My sympathies. In the robust economy days of the last administration, I was
being routinely shafted like that due to mutual fund income that I never
really saw - the proverbial paper profits. Now, as I've kept extreme
overwithholding, I get a lot back each year. (I'm taking the day off work
today to do taxes, but would rather read the newsgroup).

The very first time I had to pay extra was for the State of Michigan, where I
was living in the mid 70's. I took an old dress shirt and a Magic Marker, and
wrote on the shirt in big letters: "You took everything else; take my shirt,
too!". Stuffed it into a big envelope with the tax return, and sent it off.

Probably was routine to them, but it made me feel better.



Art
Temporary usercode - to be deleted when spam starts. Use MyBrainHurts at this ISP to reach me

in article 5vx7e.68$Zi.55@fed1read04, Arthur Shapiro at
wrote on 4/14/05 12:11 PM:

In article , "CatNipped"
wrote:
We just got back from H&R Block. We owe *FOUR THOUSAND SIX HUNDRED DOLLARS*
to the IRS! thud

My sympathies. In the robust economy days of the last administration, I was
being routinely shafted like that due to mutual fund income that I never
really saw - the proverbial paper profits. Now, as I've kept extreme
overwithholding, I get a lot back each year. (I'm taking the day off work
today to do taxes, but would rather read the newsgroup).

The very first time I had to pay extra was for the State of Michigan, where I
was living in the mid 70's. I took an old dress shirt and a Magic Marker, and
wrote on the shirt in big letters: "You took everything else; take my shirt,
too!". Stuffed it into a big envelope with the tax return, and sent it off.

Probably was routine to them, but it made me feel better.



Art
Temporary usercode - to be deleted when spam starts. Use MyBrainHurts at this
ISP to reach me

I heard the best tax story the other day from an accountant on NPRs Money
Marketplace. The acct. had a couple with him at the exit audit with the IRS.
IRS guy says to the husband "I don't know how you thought you could write a
10000$ check to a jewelry store for a ring for your wife and not declare it"
whereby the wife looks at the husband and says "WHAT ring? I didn't get any
ring. What else have you been doing that I should know about?" Accountant
feels like sinking under the table. Wife files for divorce. Accountant
fired.

"Margaret Fine" wrote in message
ink.net...
CatNipped wrote:

We just got back from H&R Block. We owe *FOUR THOUSAND SIX HUNDRED
DOLLARS*
to the IRS! thud

--
Hugs,

CatNipped
http://www.PossiblePlaces.com/CatNipped/



Oh, and my .02 on H&R Block... We've always done our own taxes. One
year we had a tricky situation that we researched and filed ourselves.
The next year my husband's brother had the exact same situation and they
went to H&R Block. The H&R Block called me and asked me how we did it
and did the same thing. They hadn't a clue since it wasn't a normal
return. I'd get a second opinion since yours didn't sound straight
forward, either.


After using Block Premium for years, and paying a lot for it, I began
doing our taxes. Though they are complicated, it is not that hard to
do it. I save what I would have paid Block and what they would
have saved me too. The new software is making them obsolete.

"Victor M" wrote in message
oups.com...
CatNipped wrote:
I'm a *lot* confused as to the difference between *filing* and
actually
*paying* taxes. Some people here have said be sure to file before
the 15th,
but implied that you don't have to send a check at the same time????
I

That's true. I think you can also file an extension, which would allow
you to file later.

You can but it is about as complicated as just going ahead and
filing. All CN needs to do is include a small check when she files,
and include a letter saying that she wants to pay via installments.
There is a nominal amount added to each installment. After filing
she will get a letter from the IRS instructing her on how to pay
in installments, how much, when, etc.

"jmcquown" wrote in message
. ..
-L. wrote:
jmcquown wrote:
I don't have any problem with it. Look at how many people can't
afford an IRA at all...it's pretty much a luxury.

It's not a luxury. I've paid into the Social Security system for 25
years but it's doubtful I'll get enough back to be able to live on
the "pension" they give me in 20 years.

That's a separate issue altogether.

The IRA I have was a 401K provided by my employer
but the money that went into it came out of my blood sweat and tears.

Yes, as did mine, but my point is this - how many people live
day-to-day, paycheck-to-paycheck and don't have enough money to even
set any aside for an IRA?

Did that for a number of the last 20 years, thank you. At jobs that didn't
offer retirement funds or 401K's and only enough to meet the bills,
barely.

Quite a few, especially in our economy as
it is today. I feel blessed that I'm educated/lucky enough to have
had a good job/career where I made enough money to have IRAs. Many
people are just struggling to make ends meet.



I had it "rolled over" into an IRA when I lost my job a year ago.
Again, I paid into that fund with my own hard-earned money; it came
out of my paycheck. It's *my* money. I have no problem paying
taxes on it. But you should be able to use it when needed without
being hit with a double-whammy called a "penalty" for early
withdrawal *after* electing to pay the taxes on it up front when you
need to use some of it.

Jill

But then it becomes a savings account and not an IRA.

That's silly. If I'd rolled the entire thing into my savings account it
wouldn't be held in mutual funds and wouldn't be tax-free until I decide
to
withdraw from it. I have a savings account; they are two totally
different
things.

Too true. And it's taxed out the yaya! The IRS gets you coming and going -
they tax you when you spend money and they tax you when you save money!

penalty is there - so that the money is somewhat insured for the
investemt group that holds the IRA. It's a payoff - you generally get
better returns and tax bennies on an IRA in exchange for "promising"
not to withdraw the money early - and the penalty is part of that
promise.

The Penalty is for the IRS, not the IRA. The mutual fund stockholders
could
care less what you do with your shares in said fund. Consult your tax
advisor.

Exactly. I *PAID 26%* in taxes on the money I withdrew - but that wasn't
enough for our greedy government, they wanted *another* 10% in penalties,
and then even *more* in penalties because I didn't pay the first penalties
(which I didn't know about!!) before a certain date! Sheesh!!!

I agree there should be a one-time "hardship withdrawl" clause or
something - there probably is - I don't know. And I understand that
the unforseen happens, sometimes. But it *is* an IRA and not a
savings or investment account. And with that comes the constraints.

It's still my money; I should be able to do with it what I want AFTER
paying
the taxes (which I do). Try being unemployed for a year and using up your
savings... what happens? Oh, I have an IRA. Now guess what? I won't
have
enough to retire on but what the hell. I've kept a roof over my head,
myself and pets fed. Maybe when I turn 65 I'll just shoot myself.

People who haven't been there just don't understand that. Unfortunately,
I've been there several times in my life (once when I had two little
children depending on me). It's so easy to say, "Oh la, that's too bad,
they should have planned for it" when it's happening to somebody else - it's
gets a little bit realer when it's happening to you.

It used to make me crazy when I worked in corporate America and heard
"professional" people putting down the worker bees with, "Well, if they
wanted to do better in life they should have gone to college". What they
never considered was the fact that some people don't have parents who are
able to *put* them through college, all expenses paid like they do! They
were just never faced with having to pay their own way, and being born with
a silver spoon in their mouth made they a bit myopic! ;

Hugs,

CatNipped

Jill

"EvelynVogtGamble(Divamanque)" wrote in message
...


Jeanne Hedge wrote:


I heard that the IRS charges penalties if you don't make any sort of
payment, but the amount of penalty depends on if you file on time. I
heard it was something like a 5% penalty if you don't file but 0.5% if
you do file. Plus they'll help you work out a payment plan. True?

I work for a tax accountant, and here is what we advise our clients:
Whatever you do, at least FILE your return on time, even if you can't pay
anything right now! (An extension would give you more time to file, but
since you're supposed to pay whatever you'll owe, along with the
extension, that doesn't offer you much help.)

There are various possible penalties involved, but you can at least save
yourself the hefty one for late-filing. Of course they charge interest on
the late payments, as well as penalties, but since interest is added onto
the entire balance you owe (including penalties) it's best to pay as much
as you can.

For information about installment agreements, etc., go to:
http://www.irs.gov/businesses/small/...108330,00.html
Although H & R Block are fine for normal tax preparation (in fact when my
firm suggested I take a tax course - at their expense - that had no
problem at all with my signing up for the one Block offers). However,
beyond standing behind their work, if the government should have
questions, I'm not sure how much support they give you for things like
reaching payment agreements with the IRS. (Our firm does, of course, but
since our minimum fee for tax returns is $500, we're obvioulsy geared to
wealthy clients - who can also find th4emselves short of money from time
to time.)

Thank you for the advice! But I just talked to my credit union and found
out that they'll go ahead and put the $5,000 into my checking account (I
have an "open application" with them and they'll do that with just a phone
call). They're giving me a 7.9% interest rate on a 2 year unsecured loan,
so I took it figuring that would be better than the IRS will give me and I
*won't* have to deal with Uncle Sam! ;

Hugs,

CatNipped




I really found the tax "advice" of putting what you owe on your credit
cards amusing (this was on CNN). The did say it wasn't the best idea,
but also said that if your plastic gives you some sort of benefit
(like frequent flier miles or Discover's rebates) then it might be
worth considering. More debt to the bank to get out of debt to the
government, eh?





Jeanne Hedge, as directed by Natasha

============
http://www.jhedge.com